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Risks are now more frequent—and more intense when they occur.
Going to extremes
With catastrophic events on the rise, companies face nonlinear shifts to their risk-return profiles. Here’s how to prepare.
The new landscape of risk
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Asymmetric
Yet not everyone suffers equally from catastrophe. While more than 50 billion-dollar US companies filed for bankruptcy in 2020, the pandemic’s effects varied widely.
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Risk, resilience, and rebalancing in global value chains
Surprised?
Some risks are more predictable than others. Prioritize the ones that could bring an existential crisis to your company.
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Risky business
Preparing for the new landscape of risk requires more dynamic and flexible risk management.
Risk, resilience, and rebalancing in global value chains
Report – McKinsey Global Institute
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Responding to the great acceleration requires companies to experiment with and invest in new digital technologies.
The disaster you could have stopped: Preparing for extraordinary risks
Article
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The disaster you could have stopped: Preparing for extraordinary risks
Article
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Meeting the future: Dynamic risk management for uncertain times
Article
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The disaster you could have stopped: Preparing for extraordinary risks
Article
Meeting the future: Dynamic risk management for uncertain times
Article
0
Every
year
Every
2 years
Every
3 years
Every
4 years
Every
5 years
1 to 2 weeks
2 to 4 weeks
1 to 2 months
>2
months
Expected frequency of disruptions by duration
Level of certainty
about impact
Scope of
impact
High
Low
Low
High
Whole company, certain impact: predictable surprises
Risk
threshold
Plotting high-consequence, low-likelihood risks
Finance and
insurance
Construction
Retail
Transportation
and warehousing
Accommodations
and food services
Arts, entertainment,
and recreation
0
–7
–9
–23
–45
–60
Year-over-year change in real GDP for selected industries, 2Q 2019 to 2Q 2020, %
Detect risks and
control weaknesses
Delimit risk
appetite
Decide on
risk-management
approach
Delimit risk
appetite
Delimit risk appetite
Ability to set limits on risk taking dynamically, accounting for business’s values, strategy, risk-management capabilities, and competitive environment
Decide on
risk-management
approach
Decide on risk-management approach
Ability to decide promptly if risk requires immediate or more prolonged response, design and undertake appropriate response or mitigation, and institute feedback loop to track response effectiveness
Detect risks and
control weaknesses
Detect risks and control weaknesses
Ability to anticipate, predict, and observe threats rapidly and accurately based on disparate internal and external data points and to assess risk magnitude, risk-impact duration, and internal-control effectiveness
3 core components of dynamic risk management