Is horizon scanning more important than ever?
The world is increasingly complex, interconnected and disrupted. Resilient organisations actively identify and plan for emerging risks. They scan the horizon for novel risks, or to anticipate how known risks could change.
The Global Risks Report (GRR) presents the risk views from hundreds of organisational leaders across all sectors. The GRR is an invaluable source of information to identify new and changing risks that threaten our organisations and strategic goals.
Organisational leaders would be forgiven for focussing only on short term risks and priorities. Our customers are now looking to the future and how they can position their organisations to be successful in the ‘new normal’, whatever that will look like.
Identifying the risks is important, however this is not enough to become resilient. The aim should always be to take proportionate action, by changing our plans or strategies.
Horizon scanning is an often-neglected element of effective risk management. Key questions to consider include:
- Do we systematically identify and record emerging risks & uncertainty that could affect our organisation in the next 5+ years?
- Do we engage with strategic managers and the Board or Council Members to understand their views of emerging risks? How do we adjust for optimism bias and blind spots in our research?
- Do we research and gather data on emerging risks to better understand them? This should include monitoring activity such as regulatory changes, socioeconomic and market trends.
- Do we use this research to inform other risk management activities, such as stress test strategic plans or scenario planning exercises, and insurance coverage?
- Do we review strategic plans in light of emerging risk and research we have created?
A systemic approach will mean identifying risks sooner, giving your organisation more time to understand and then plan for the risk.
The 2021 report highlights many risks you may want to consider when horizon scanning. Environmental risks such as failure to act on climate change, environmental damage and extreme weather events are both highly likely and impactful. Although it was a silver lining for many to see the reduced emissions from the global 2020 lockdowns, these are predict to bounce back quickly.
Other risks related to COVID and our response are also increasing. Infectious diseases are high on the list, but our dependence on technology as a result of the pandemic and susceptibility to cyber-attacks has also increased. In fact, digital opportunities are an interesting topic in the coming years for organisations to consider. Whilst it has been reported that automation may replace 85 million jobs in only 5 years, it remains important to stay up to date with digital trends as the digital world is also set to create 97 million jobs by 2025. With internet usage rates varying across the globe from 17% to 87% of the population – is there also a risk of a digital division?
Risks associated with society such as the impact of lost education time could result in a significant number of young people’s life chances being impacted. During the first wave of the pandemic 80% of students globally were out of school, and 30% of the population were unable to access digital learning. The question remains, how will this have impacted student’s futures? They are our future leaders.
Summary
Success today is not a guarantee of future success. Risk events - pandemics, climate impacts, and technology failures - will likely occur at speed and will likely seem obvious in hindsight. But we operate in a world that is difficult to predict, increasingly complex, and interconnected. Value and stakeholder trust can disappear overnight.
Resilient organisations anticipate and respond to emerging risks quickly and effectively. Horizon scanning is a tool that creates resilience by helping strategic decision makers to anticipate and respond to uncertainty.
The risks highlighted will mean different things to different organisations. It is important our leaders are given time to analyse the emerging risks that could have the greatest impact on their strategic goals.
No one can predict the future exactly but with some inspiration and guidance we can all be better prepared for the disruptive risk events of the future. Horizon scanning has never been more important.
