Risk management shows resilience

Global Risks 2015
PostedMarch 18, 2015, in  Step 8: sustainable society
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In the next 10 years, the outbreak of an international conflict is the most likely threat to world. On the other hand, a water crisis will have the greatest impact. Two conclusions from the not so cheerful report Global Risks 2015 from the World Economic Forum. What can entrepreneurs learn from that?  

900 global leaders

Every 10 years, the Global Risks report offers a peek inside the heads of global leaders from the business world, Academia and the public sector. For the 2015, edition, about 900 decision-makers completed a detailed questionnaire. The probability and impact of 28 risks were mapped out. In addition, the underlying connection between these risks was examined, since this substantially amplifies the effects. For example, the disappearance of a national government will lead to social instability and therefore to a higher unemployment. 

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Risk constellations

For 2015, 3 ‘risk constellations’ were identified:

  1. Geo-political versus economical: regional cooperation and integration also plays into the hand of protectionism.  For example, the Ukraine crisis also effects trade with Russia and that undermines a healthy economy.
  2. Urbanization in developing countries: the world is changing from a rural to an urban society, particularly in Asia and Africa. If this growth is too rapid, the will undoubtedly bring about more risks when it comes to employment, food supply and quality of life.
  3. Management of emerging technologies: technology is developing at a rapid pace and that provides both opportunities and challenges. Artificial intelligence, for instance, can help the healthcare sector to move forward, but also raises questions: how smart are the machines allowed to become?

Poorly prepared

If you dig deeper into the risks, you cannot avoid encountering the question of how well we are actually prepared for a crisis: to what extent is prevention properly organized? The Middle East and Europe are poorly prepared for a water crisis, while in Southern Asia urbanization is a problem. Europe, Latin America, the Caribbean, North Africa are also at great risk if there is an outbreak of social unrest.  

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Resilience

There appears to be a long way to go when it comes to prevention, but in Global Risks 2015 just as much importance is placed on ‘resilience’, the ability to bounce back. Some incidents, such as natural disaster are quite simply unavoidable. That does not apply to how you deal with them.  

‘Prevention is obviously important, but so is resilience – the ability to bounce back at least as strong as before, and maybe stronger’ 

Integrated approach

Those who want to arm themselves, businesswise, start by taking stock of the risks. The entire company in all its dimensions needs to be examined. That requires an integrated, holistic approach, a helicopter view of the entire chain. Once the risks have been identified it can lead to other strategic choices, for example about investments or production sites. In the event a risk unexpectedly becomes reality, knowledge of the situation increases the chance of an adequate response. And that is a comforting thought.  

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PostedMarch 18, 2015, in Step 8: sustainable society
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