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The global risk landscape has never been more complex, interlinked or dynamic than it is today – a development which has prompted the World Economic Forum to speak of the era of the polycrisis. Although overseeing this complexity poses a major challenge for risk managers, it is nonetheless an essential task for protecting your business. With this in mind, the Horváth Risk Perspectives initiative creates opportunities for the discussion of selected themes with risk management experts from the industrial, scientific and technological sectors. These discussions effectively contribute to ensuring that we can better address the complex risk landscape. The following is an overview of the questions addressed at the last Horváth Risk Perspectives session, which took place at Hotel Ameron beside Neuschwanstein Castle in March 2023:
Trusted governance & resilience
What role does integrated risk management play with regard to resilience?
Integrated risk management is important in view of the interdependent nature of the risk landscape. It is an approach which enables you to detect disruptions at an early stage. After all, risk management silos do not arise solely among traditional risk management functions such as compliance, business continuity, etc. Functional risk management activities must also be used more efficiently and in a more structured manner in future, to ensure trust-based governance.
No resilience without trusted governance!
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Risk management & performance management
How can companies better integrate their risk and performance management?
Even though integrating risk and performance management will help you achieve your business goals more effectively, these two disciplines are rarely linked. However, a truly resilient organization is one that is financially resilient and also detects trends at an early stage. In practice trends can be difficult to identify, as it is not clear which KPIs are affected by risks and how they work together. To link the dots takes time and experience. It is not a one-time thing and even more important to continuously ensure that risk and performance management are closely linked and agile.
No business confidence without breaking the silos between Performance & Risk!
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AI & risk management
What role will AI play in the early detection of risks and causal interdependencies?
Emerging trends indicate that companies are using “digital twins” to take existing data and translate it into risk terminology. Simple AI-supported applications are already in use, and these are continuously being expanded with new developments such as ChatGPT. However, it seems that there is still a long road ahead before we can really talk about the existence of cognitive analytics; this refers to a target scenario in which critical causal chains are identified long in advance and automatic recommendations are provided for the best possible countermeasures. The hurdles we need to overcome are not only technological, but also methodological. It is undisputed that the use of AI in companies will lead to improved risk identification in future, and as such present decisive advantages for safeguarding the company’s success.
No keeping pace with increasing complexity without the use of AI!
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Risk culture & the role of risk management
Every employee becomes a risk manager – what implications would that have for the function of risk management?
Risk management is already among employees’ everyday tasks if they want to achieve the company’s objectives. However, there is often no common language around risk management practices, which tend to exist in isolation from one another. For risk managers, decentralizing risk management while simultaneously taking a holistic view of the risk landscape is something of a balancing act.
Decentralized risk management cannot be achieved without a firmly established risk culture within the company!
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