WELCOME TO THE CONTINUITY CENTRAL ARCHIVE SITE

Please note that this is a page from a previous version of Continuity Central and is no longer being updated.

To see the latest business continuity news, jobs and information click here.

Business continuity information

PwC asks: Are black swans turning grey?

Many organizations’ risk management practices are worryingly incomplete and are being outpaced by an era of catastrophic ‘black swan’ events, stresses a new PwC paper.

‘Black swans turn grey: the transformation of risk’ suggests that businesses need to be more agile and innovative if they are to combat catastrophic, major-impact black swan events such as terrorist attacks, tsunamis or major oil spills, by updating and innovating archaic practices to achieve wider risk resilience.

Richard Sykes, PwC governance, risk and compliance leader, said: “The risk landscape is changing, and established risk management approaches need to be updated to keep pace. Many organizations currently have the wrong focus. They major on financial and operational risks and crucially regard risk and strategy as separate, rather than seeing risk-taking as a key source of value creation. But the world where risk events could be predicted – and their impacts controlled – is fast disappearing.

“By their nature, black swan events should only occur at unpredictable intervals. Yet recent experience suggests events that fit this definition are happening more frequently. Rather than being infrequent outlier events, it seems they are now part of a faster-changing and more uncertain world, which makes it hard for businesses to understand where new risks are going to come from.”

The paper suggests that enterprise risk management can influence the personal behaviours and sense of responsibility that businesses need by encouraging a box-ticking, process-led approach. This could lead front-line staff to see risk as separate from their own business decisions. Large organizations now have blind spots from which high-impact risks can emerge to damage or even destroy their business.

Comprehensive risk management practice, on the other hand, makes companies distinctive, more appealing to prospective clients and gives competitive edge. When properly embedded it helps protect reputation and enhance resilience, while providing a clear view of the board’s attitude to integrity, risk and safety. To help achieve these objectives, the paper suggests questions organizations should ask themselves, such as “does the board have people with enough industry expertise” or “are the CEO and board setting the right behavioural example and risk-aware culture” and “do rewards encourage risk-based thinking and behaviour?”

Read the paper (PDF).

•Date: 17th January 2012 • World •Type: Article • Topic: Enterprise risk management

Business Continuity Newsletter Sign up for Continuity Briefing, our weekly roundup of business continuity news. For news as it happens, subscribe to Continuity Central on Twitter.
   

How to advertise How to advertise on Continuity Central.

To submit news stories to Continuity Central, e-mail the editor.

Want an RSS newsfeed for your website? Click here