The risk landscape is evolving fast in business especially with technology. Risk management practices critical for effectively managing & preparing for trends.

Along with technology, the risk landscape is evolving fast. Daily headlines remind us that the future is on its way, and sometimes it feels like new risks and risk management practices are around every corner. Consequently, every organizational leader’s frameworks for new opportunities and challenges are already perceptible.

What should risk leaders prepare for? Here’s a roundup of current risk trends to watch in 2022. Each trend can potentially change the risk landscape for organizations worldwide, as well as improve (or worsen) their risk management.

Augmentation of Human Decision-Making by Cognitive Technologies

Artificial intelligence (AI), data and behavioral analytics, and autonomic computing are now gradually adopted in risk management. These cognitive technologies augment human decision-making and self-manage every risk and even potentially self-defend and self-heal themselves during high-risk situations.

Possible Opportunities:

• Rational decision-making is enabled by employing visualization that can analyze and convey information in a human-friendly way; and
• Employees are upskilled to effectively extract insights and data from AI and other cognitive technologies.

Potential Pitfalls or Threats:

• Unintended outcomes can take place due to incorrect sourcing of data and mistaken predictions done by overhyped technologies; and
• The possible human backlash from automated decision-making and AI’s lack of assurance and trust mechanisms.

Real-Time, Dynamic Risk Control

The advancement of sensor technology also shared influences in managing risks, thanks to the increasing investments in the Internet of Things or IoT. Smart devices’ sensory, communication, and computing capabilities allow organizations to determine risk events, formulate critical insights, and implement solutions immediately, making an organization’s control pervasive.

Possible Opportunities:

• Sensor-enabled devices can play a role in reducing cyber fraud and security risks through implementing context-aware access capabilities;
• Improved supply chain’s traceability for security-sensitive industries (e.g., food production and pharmaceuticals); and
• Risks introduced by customers can be mitigated through behavioral analytics, and real-time data feeds.

Potential Pitfalls or Threats:

• Intensified exposure to cyber risks since business processes heavily depend on smart devices;
• Pervasive monitoring can trigger privacy concerns of assets, including customers, employees, and business partners; and
• Increasing liability due to data available for other people, which are considered formerly safe but can turn into risks once revealed.

Businesses Operating as Networked Ecosystems

Sharing-based and crowd-drive initiatives are now becoming the new trend among stakeholders. Hence, many organizations and even governments are now embracing radical transparency and an ecosystem-led approach to risk management. This networking transforms risk management into an open and collaborative approach.

Possible Opportunities:

• Gamified crowdsourcing and other collaborative approaches can initiate cost-cutting for risk management; and
• Stay up-to-date with the recent threats and mitigation practices through creating alliances with risk researchers and experts.

Potential Pitfalls or Threats:

• Sensitive information, such as data from a credit card after bankruptcy, can be leaked through data-sharing portals, which can incur legal costs and reputation damage; and
• Data manipulation that other people from partnered companies deliberately do can take place.

Digitization of Payroll Operations

Digital transformation has also reached human resource (HR) management. It has resulted in payslip dematerialization that’s eco-friendlier, employee-friendlier, and more efficient. Dematerialization of payslips can also offer autonomy and transparency, guarantee regulatory compliance, and improve employers’ brands.

Possible Opportunities:

• Automated sending of employees’ payrolls via email, faster processing of employees’ personal loans with direct deposits, up-to-date salary accounting, and more efficient report-making at a customer’s request;
• Better archiving management through Electronic Document Management (EDM); and
• Sustainable (i.e., less travel, paperwork, and storage space), reliable (reduced the risks of loss or damage related to the use of paper), and cost-efficient (no need to use paper and BYOD or bring your own device).

Potential Pitfalls or Threats:

• The public transparency of employee information online and the like is susceptible to payroll direct deposit fraud

High-risk Innovations that Drive Out Regulatory Agenda

Gone are the days when regulations rule. In this time and age, fast-paced innovations make the regulations keep up. Ironically, several organizations like businesses, societies, and associations are opting for high-risk innovations as a strategy, despite the possibility of falling outside the scope of existing regulations.

Possible Opportunities:

• Growing application of innovative business models like freemium, sharing-based, and subscription-based, resulting in the increased diversity of competitors;
• Prompting the new industrial convergence, which refers to the blurring of the market boundaries between media, medicine, and manufacturing;
• Allowing innovations to gain steam by deliberately restraining regulators; and
• Decrease regulatory risks by controlling customer and public support and educating regulators.

Potential Pitfalls or Threats:

• Potential investments losses in projects that are in legal gray areas;
• Fast-moving disruptive institutions can easily gain market share from incumbents even upon regulations are implemented; and
• Lobbying attempts against disruptive startups can cause negative publicity.

Final Thoughts

The nature of risk management is evolving. In the second decade of the 21st century, risks aren’t something to be anxious about, minimized, or avoided. Instead, risks are now utilized as tools to produce higher performance levels.