Making decisions in a data desert: the challenges of emerging risks

Airmic yesterday released a new guide designed to provide practical guidance on managing emerging risks. ‘Emerging risks: a practical guide – helping to develop insight and manage uncertainty’ was released at the organisation’s annual conference, which is taking place in Liverpool this week.

The report acknowledged that with typical characteristics of deep uncertainty and limited available information, emerging risks can be difficult to manage – they can materialise quickly, constantly change, and can significantly affect an organisation and its operations. 

“While all risks in an organisation carry some residual uncertainty, with emerging risks, higher levels of residual risk are common. Procedures must be in place for continuous monitoring of these risks to allow the organisation to follow changes and adapt,” the report stated. 

“While emerging risks can exhibit quite subtle and not always obvious differences when compared with other risks, we recommend that organisations manage emerging risks as part of their overall risk management system, considering emerging risks alongside other risks.” 

The report examines one of the biggest challenges of managing emerging risks: a lack of reliable data. “We manage risk using information and knowledge. Emerging risk sits in an information and data desert, so misinformation, disinformation and the invalidation of previously verified facts is a reoccurring problem,” it stated. 

To address these issues, it recommends organisations invest in horizon-scanning techniques and scenario analysis techniques.

“We can consider the complex concept of knowledge as the ability to apply information thoughtfully and effectively when making decisions. However, emerging risks may have strategic implications, which can bring threats and opportunities, requiring us to level up and develop our knowledge towards strategic intelligence – the ability to make sound decisions for our future best interests.”

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