Risk in Transition

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Risk in Transition

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The bombing of the 117th Boston Marathon is but one example of how complex new risks can occur when we least expect them.  As more details emerge about the alleged perpetrators we learn that even with the beefed-up security presence at public events traditional controls are still ineffective at preventing horrific attacks. 

Thankfully, through the vigilance of the general public, law enforcement, and new technology, such as, surveillance cameras and social media our ability to respond to such events has accelerated in real time allowing the capture of these suspects but not without additional tragic loss of life.

Law enforcement’s ability to sort through surveillance footage, cell phone and video footage from the public and other sources would not have been possible 5 – 10 years ago with the speed in which it was done to identify the assailants.  Security spokespersons also credit improved coordination of Federal, State, and Government resources along with new analytical skills for the speed and agility to zero in on the suspects.   

Much will be learned from these events to improve security in the future.  As tragic as these events are there are valuable lessons for senior managers and risk professionals in dealing with less lethal but no less important risks facing all organizations today.

PriceWaterhouseCooper’s April 2013 whitepaper entitled, “Risk in Review, Global risk in the transformation age”, goes further and explores the global threats facing organizations and risk officers responsible for dealing with a host of asymmetrical risks impacting each of us simultaneously and  over consecutive time periods.  PwC uses the term “transformation” however Michael Monahan, CRO for Pitney Bowes, succinctly states, “Transformation is a bit of an overused term.  It is part of how you do business every day now.” 

PwC’s survey and the emerging themes discussed in this report are a reasonable first step in starting a discussion about strategic risks and plans to address a world in transition. 

The themes:

  • Building a Risk Resilient firm;
  • Addressing the talent gap and building a risk aware culture;
  • Understanding social media and developing reputation risk responses; and,
  • Implementing new generation risk analytical capability

According to John Sabatini, Partner Advanced Risk & Compliance Analytics Services at PwC, “the challenge that many organizations face is that they must aggregate disparate and complex data from hundreds of source systems”.  “One in four risk executives expressed dissatisfaction with their ability to identify and forecast emerging risk.”

PwC’s survey poses more questions than answers however the events that unfolded in Boston illustrates that risk is in transition.  The challenges facing healthcare in the form of massive regulatory reform, financial services resulting from anemic economic growth and the protection of personally identifiable information or general industry in the form of supply chain disruptions from natural or man-made disaster require risk solutions that fit each organization.  Traditional GRC solutions are not sufficient to respond with the speed and agility required. 

The lessons from Boston are very clear.  Teamwork and collaboration is most effective when one person is in charge of coordinating events, assets and people to address risk events.  Leadership matters!  The inevitable finger-pointing may not be prevented but can be delayed until the events are resolved. 

Second, technology enabled faster discovery of the facts but does not create the ability to “see around corners”.  The over promise of pattern recognition and resolving risk events before they happen may eventually become a reality but is near impossible not matter how sophisticated the technology. 

Lastly, effective training and preparation through scenario planning and rapid response times help to mitigate the damage.

I hope these events do not happen in your town or organization but if they do I hope that you are better prepared by planning accordingly.

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