What does 'Risk' mean for us?
Risk is a complex and often misunderstood subject. By its very nature it is uncertain and for most of us we only get to hear about disasters. The perception of risk can be very different depending on whom you talk to. The Challenger Shuttle disaster is a classic example of this when Ground Engineers assessed the risk at 100/1 but Management quantified this at 100,000/ 1.
Risk affects how Businesses plan and invest for the future. Despite its connotations, Risk doesn't always mean downside. The actions and investment that busine ss leaders make today can have a tangible impact on future bottom line, and a positive benefit to society.
But even the most successful companies are hard hit when they least expect it. And the outcome of risk events can be seriously detrimental upon a company's hard earned reputation, revenue and share price.
Tsunami, floods and terrorism, are the high risks that usually come to mind. However there are many hidden risks that are gradually having major implications in the world we live in. Political and societal shift have a far wider impact than many might appreciate. The growing gap between the wealthiest and poorest is dividing society, and today 20% of the population use 75% of the world's resources. As populations grow, there is no getting away from how people feel. They are beginning to vent their frustration and anger and the advent of Social Media / Internet helps to drive revolts, causing riots to fester very quickly. Disenfranchised individuals are being lured into crime and terrorism, and even Governments being overthrown.
At the same time 1.4m people are migrating to cities every day, and there were 50% more displaced individuals last year than during the whole of World War Two. Urbanisation will inevitably lead to overcrowding, homelessness, disease, and once again crime in our towns.
Water shortage, an issue we wouldn't particularly identify with at home, is one of the top 3 Global concerns for businesses and Authorities. As a result, Vegas will be history in less than 15 years unless they can find an intelligent and sustainable alternative.
Better living standards and fiscal changes elsewhere are tempting skilled UK workers to migrate overseas. And as technology advances, it is estimated that 5m traditional jobs will be taken away in the UK over the next 30 years. This will leave many companies struggling to find skilled staff.
Emerging technologies bring all sorts of new risks that we'd never considered before, drones and driverless cars are examples of risks that companies, and risk managers are trying to comprehend.