Signal monitoring can be used to track emerging risks and identify the trigger points or early warning signs that indicate an organisation may need to review its strategy. So, how are risk managers doing this?
I gathered 6 tips from our network of risk leaders, exchanged during one of our private meetings on creating an effective signal monitoring process.
These are summarised in brief below – the full meeting write-up is, of course, available to members on our Intelligence platform.
1.Establish your watchlist
An enterprise watchlist is a good way of identifying the top emerging risks an organisation is facing over the next five to 20 years – around 15 risks is usually a good number to have on the watchlist.
2. Categorise your emerging risks
Categories can be used to place emerging risks into different risk types, such as operational or strategic. Emerging risks often have more of an impact on the strategic category, as it is here that the organisation will usually have adopted a more long-term view for the direction of the organisation.
3. Define your signals
When determining which signals to use, you should approach each risk on the watchlist as requiring its own individual signal. Sit down with the relevant subject matter expert in your organisation to determine which signals may be appropriate for monitoring that particular emerging risk.
But it is also important to bring in outside views from other parts of the organisation to challenge viewpoints and to fully understand the risk and how it could best be monitored.
These conversations should look at the longer term impacts of the emerging risk in question, but then move back down the timeline to ascertain what things need to happen to reach that point.
4. Describe and articulate
Signals should first be described qualitatively and at a high level, such as a change in assumptions underlying climate change projections, before more in depth measures are added to the matrix of signals being used to monitor that risk.
You can then determine what the cascading impact to corporate strategy these different measures could be.
Be aware, however, that these measures may not have a set numerical trigger point at which point action is taken.
5. Examine external sources
Media monitoring is often useful for picking up emerging trends in particular sectors or around specific organisations.
Influential people and organisations in relevant sectors are useful sources for picking up on potential sources of change.
This will then lead you to the early warning signs that could indicate a change in the nature of the emerging risk your organisation is facing.
Ideally this will lead to each risk on your watchlist having four to five signals in order to keep the process simple and usable in a practical setting.
6. Establish your decision-making process
Once the relevant signals have been defined, there needs to be a system in place that acts as a funnel to bring through all the information being observed by the organisation into one place so that it can be compared against the signals for each risk on the watchlist.
We’ll be running more meetings on signal monitoring. Click here to find out more about our upcoming virtual meetings.
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