Fundamentals of Risk Management

Managing emerging risks
All organizations are concerned about changes in the external and internal context 
that give rise to new challenges, uncertainties and opportunities. These changes can 
be considered to be the emerging risks facing the organization. However, considera-
tion of emerging risks can be difficult unless the organization clearly understands
the nature of the emerging risks that it faces. Emerging risks can be divided into three 
categories, as follows:
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new risks that have emerged in the external environment, but are
associated with the existing strategy of the organization – new risks in
known context;

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Approaches to risk management 
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existing risks that were already known to the organization, but have 
developed or changed circumstances have triggered the risk – known
risks in new context;
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risks that were not previously faced by the organization, because the risks are 
associated with changed core processes – new risks in new context.
Several business developments have increased the level of risk faced by organizations 
in recent times, including moving into new markets, embracing new technologies 
and developing increasingly complex supply chains. Generally, these increasing risks 
will be under the control of the organization itself. Additionally, there are many 
emerging or developing risks that are not within the control of an individual
organization, including:
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climate change;
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sovereign debt;
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national security;
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changing demographics.
When seeking to manage these emerging risks, an organization should evaluate 
whether the risks are to be treated as hazard, control or opportunity risks. Depending 
on the activities of the organization, many of these emerging risks may simply be 
threats to the organization or represent opportunities for future development. In 
some cases, the emerging risks will simply represent additional uncertainties that 
need to be managed.
An important consideration when thinking about emerging risks is the speed at 
which they can become significant. Some risk management practitioners refer to
the speed of development and change of risks as the risk velocity.
A good example of emerging risk is nanotechnology. Nanotechnology is used 
extensively in the medical and, to some extent, cosmetics industry to improve the 
effectiveness of cosmetic treatment of skin conditions. Whether any long-term risks 
will emerge from the use of nanotechnology has not yet been fully established.
Another good example is that associated with the use of mobile phones. Mobile 
phones have become commonplace, but the technology has developed rapidly over 
the past 25 years. Mobile phone signals were much more powerful 25 years ago. 
Therefore, if any health allegations begin to emerge against the use of mobile phones, 
these health effects are likely to be associated with the technology that is no longer 
used. This will represent significant challenges in deciding whether any health
hazards no longer exist because the technology has changed, or whether the health 
hazards are just as significant and will prove to be equally associated with current 
technology.

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