Man-made risks, such as cyberrisk, physical security threats and climate change—are the driving forces in the global threat landscape. Unlike natural risk, which remains a central preoccupation, man-made risks have agency. Simply put, a tornado does not pre-plan where and who it will strike. A cyberattack, by contrast, is generally not a random event. While large organizations can often shield themselves from the financial consequences of many risks, the ensuing reputational harm can irrecoverably erode market share and stakeholder trust. Small- to mid-sized enterprises confront these challenges as an existential threat.
The quest for global risk agility is principally a management framework aimed at changing the way organizations and senior leaders think about risk. Rather than making risk an object of “passive control” and something to be feared, agile decision makers make risk an object to be understood—with a healthy dose of respect—and properly harnessed. There is a risk in doing nothing at all in these turbulent times. Organizations, large or small, can no longer afford to remain on the sidelines.
Organizations tend to be far too passive vis-à-vis their approach to risk management. Risk does not wait for a board to have a quorum among its members before it strikes. Risk also does not recognize the annual planning, strategy or budgetary cycles that are the drumbeat of large enterprises. Too few of these organizations—particularly publicly-listed firms—are marching to the drumbeat and, therefore the short-termism, of the stock market. In the era of man-made risks, decisions need to be framed around longevity and optimization, as opposed to short-term performance and maximization. It is only through this that organizational resilience and a spirit of collective survival will take hold.
The best place to start is to create greater awareness of man-made risk in the context of global risk analysis. Too often, boards and senior decision-makers do not know what questions they should ask of each other, or necessarily where to obtain the right answers.