Managing the threat of emerging risk

RSM UK, in conjunction with the Chamber, is helping East Midlands businesses to address emerging risks via its Insight 4GRC (governance, risk management and compliance) software, which helps assess and manage an organisation’s risk and controls. Matthew Humphrey (pictured), partner in enterprise risk advisory at RSM UK, explains why it’s important to identify and manage potential organisational threats.

Directors and business owners alike face many types of risk – it comes with the territory.

But investing the time to assess the unknown, or emerging risks, can be one of those things that is constantly put on the backburner. The scale of the job in hand may appear overwhelming, but left unaddressed, it can impact on the very survival of a business.

The challenges faced over the last couple of years – from Covid, the war in Ukraine, high prices, commodity shortages and the escalating cost of living – have shown the volatility and uncertainty of emerging risks to businesses of all shapes and sizes. What’s vital is being ready to respond to the impact and knowing how to mitigate against them.

It’s those resilient businesses that have prepared, assessed, addressed and managed threats to their operations that will be best able to cope with risk.

With the greater weight of corporate governance coming to the fore in boardroom strategies, it’s important that managing these emerging risks is achievable in a practical and meaningful way.

At boardroom level, it’s vital to establish, and keep under review, a system or framework that manages risk at a strategic level and also on a day-to-day basis without it becoming counterproductive and burdensome.

By being able to determine the nature and extent of the main risks, directors can then make decisions on what risks they are willing to take or manage in order to achieve strategic objectives.

So, employing the right tools to achieve this will help businesses succeed in keeping on top of the risks.

By identifying the immediate, short-term, and medium to longerterm risks, businesses will be able to pinpoint potential weaknesses or threats, and structure the necessary processes and controls to ringfence or avoid potential damage.

These risks can come from a wide range of factors, including economic pressures; environmental, sustainability and governance (ESG) issues; regulatory and legislative requirements; and financial, technical and people resources.