The Global Risks Report 2013 is based on a survey of over 1,000 experts from government, academia, industry and civil society from around the world. The experts were asked to review 50 global risks and also to rate the strength of connections between pairs of risks. Additionally they nominated a ‘center of gravity’ defined as the most important risk in each of the five categories of global risk.
This data enabled the creation of a network diagram which highlights how risks are inter-connected in a very visual way. It exposes, what the report calls, ‘constellations of global risks’. The diagram more accurately reflects the reality of how risks are inter-related and significantly increases understanding. It suggests how a focus on mitigating risks in one category could be amplified to impact other risks.
How can you use this information in your own business? And, perhaps more importantly, how can you use similar techniques to see the connections between risks which relate to your own daily operations and the strategic direction you’ve decided on to deliver profits and growth?
This concept is something which Active Risk has been working on for a while now together with customers and academics. The result is ARM Risk Connectivity, a software tool which can be used by an organization to more accurately reflect the reality of risks and opportunities, visually display how they are interconnected and identify previously hidden risks and opportunities that could have significant impact on strategy, growth and reputation.
To further explain how businesses could benefit from being able to see risk connections, we interviewed independent experts Neil Allan – Founder and Fellow, University of Bristol Systems Centre, and risk consultant John Summers who is the former Chief Risk Advisor at Rio Tinto. The resulting 3 minute video also shows ARM Risk Connectivity in action and how it automatically displays risk information in the style of the World Economic Forum Report. We think this is the way forward for risk management and a way to use risk data for competitive advantage.
Take a look and let us know what you think by commenting below or via Twitter.
See: @WEF, @WEFRisk, @ActiveRisk