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Risk perception and management: Insights for a changing landscape

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In an era of innovation, rapid change, and uncertainty, one question that should be at the forefront of risk professionals’ minds is: Are our risk management practices and tools evolving quickly enough?

Speaking during a webcast sponsored by Marsh and produced by RIMS, the risk management society®, Carolina Klint, Marsh McLennan’s Chief Commercial Officer for Europe, Reid Sawyer, Head of Emerging Risks Groups within Marsh Advisory, and David Arick, President of RIMS, discussed the myriad risks that organizations today need to be aware of, understand, and manage to build resilience.

As the risk landscape becomes more complicated, there is an opportunity to revisit traditional approaches to risk management and determine whether they remain effective in tackling today’s challenges.

Reassessing traditional approaches to risk management

From technological threats, including the risk of AI-fueled misinformation and disinformation, to environmental concerns, such as the potentially devastating impacts of extreme weather events, societal risks, supply chain stresses, and more, organizations around the world are facing a multitude of interconnected and complex risks.

The findings of this year’s Global Risks Report, produced by the World Economic Forum with support from Marsh McLennan and other partners, recognize that the diverse and multifaceted challenges we face today are likely to persist in the long term. Moreover, today’s challenges may not be resolved  quickly.

So how can risk managers help their organizations better prepare for and withstand the potential impacts? Risk professionals should seek a seat at the decision-making table or provide their insights into the decisions being made. They also should encourage close collaboration with executive leadership to enhance their organizations’ ability to identify potential vulnerabilities early on and develop effective strategies to address them.

At the same time, it is important for risk professionals to look beyond the immediate risks impacting their organizations and strive to understand their underlying causes. While addressing current challenges remains critical, organizations must also consider how evolving and emerging risks may affect their people and operations in the longer term.

This proactive approach requires well-informed risk committees that are considered as strategic assets and can steer boards to focus on both the short- and long-term risk landscape. Risk management professionals must also be strong storytellers and use data-driven insights to communicate the potential impacts of ongoing challenges to enable the organization’s decision-makers to make the most impactful decisions. Further, fostering diversity around the decision-making table can improve an organization’s ability to identify and address challenges effectively. 

Leveraging advanced tools to improve risk management decisions

As more organizations adopt generative AI tools to improve efficiencies, it is important to focus on the potential risks associated with this technology. Establishing an internal governance structure with representation from different stakeholders is often crucial to understand and prepare for these challenges.

At the same time, AI can also be leveraged to identify potential risks, such as supply chain vulnerabilities that have been exacerbated by geopolitical tensions and extreme weather events. Business leaders must evaluate whether they are adequately prepared to withstand these shocks and invest in the risk management tools and strategies that can help them increase visibility and build more resilient supply chains.

As organizations navigate a turbulent risk landscape, their employees may also face significant challenges. This underscores that businesses must find appropriate ways to equip their people to deal with these challenges, which may require bringing senior human resources professionals into conversations about risk and proactively working together to keep people safe and secure.

Watch the replay of the webcast to learn more about the risks that businesses are facing and the role of risk professionals in helping their organizations withstand the challenges of today and tomorrow. 

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