Global risks are intensifying and today’s corporate leaders face a complex environment that is changing at an increased pace. Given this backdrop both politically and economically, it poses challenges for many organizations to prepare and be able to react both in the short- and in the long term.
Some changes in consumer behavior and culture at large are apparent, such as tendencies to work remotely, an increased number of food and parcel deliveries. At the same time, the risks are underreported, such as the inaccessibility of remote work and delivery services to some, the adverse effects of the restricted consumer movement, and the financial uncertainty for small and medium-sized enterprises.
At this early stage of the pandemic, business models are being digitized in a rush, producers are making fast decisions, supply chains are becoming unreliable, and consumer preferences are influenced by social media and trending news.
News events play an integral role in shaping the perception of risk among people. With the COVID-19 crisis in full swing, some fear that the pandemic can be fueled and exacerbated by an infodemic of false or misleading news, which adds to the current environment of uncertainty.
To help our business readers in these uncertain times, we used our Risk Radar assessment tool to evaluate and map the most prominent and evidence-based risk areas, their triggers or signals, as well as the potential ways of mitigating them.
How do you monitor and re-assess the risks? How do you assess these risks with your own company case?
Risk analysis refers to the process of identifying and assessing factors, either internal or external, that could potentially threaten the success or progress of a project or initiative. This includes determining the likelihood of a risk to occur and the magnitude of the potential impact. With a Risk Radar, companies can visualize and contextualize all the relevant risk areas related to emerging technologies and patents, new trends, and recent events affecting their business environment.
In order to understand and visualize the unique set of challenges ahead of your company, create your Risk Radar with the following actions in mind:
How are the new developments evolving, what are the signals and events stemming from the identified risks?
Some risks arise from circumstances and events outside the company’s influence or control. For example, these types of risks are usually linked to natural or political major events or global macroeconomic shifts. As companies cannot stop these events from happening, their management must focus on early identification and mitigation of their impact. External risks require constant monitoring of news and events to differentiate the signals from the noise. This way companies can develop early warning systems to minimize the scope of uncertainty.
What are potential risk mitigation strategies? When and how do we implement them? How can we better prepare for and protect ourselves from them in the future?
Given all the external and internal factors and information, many risks are in fact quite predictable, even familiar, and companies tend to classify them. For example in the banking industry commonly coined risk types are “credit risk”, “market risk”, and “operational risk”.
Other companies could have other labels for risks such as “product risk”, “supply chain risk”, “HR risk”, “IT risk”, and “financial risk”. Meaning those risks somehow speak directly to a business unit or a combination of business functions. That’s why the risk mitigation strategies and to-be-taken steps should be communicated to the respective business units.
Merely spotting potential risks is not enough. You need to act upon them. Beyond introducing a systematic process for identifying risks, clear mitigation actions need to be reflected in your product and technology roadmaps. As your action plan, the roadmap should clearly communicate the mitigation activities and the transition from the current state to the future state.
The ITONICS Innovation Software helps organizations to take their innovation management to the next level. If you want to learn more, visit our product overview or get a free trial of our software.