“Opportunity and Risk Come in Pairs” Bangambiki Habyarimana
The Above Risk Management Quote summarises what RiskForesights.COM‘s Take on Managing Risk is. Before the term Opportunity Risks becomes a meaningless Business Buzz Word, RiskForesights.COM has decided to take the Opportunity to ventilate what RiskForesights.COM Founder had in mind when he used the term in 2006 in his MBA Dissertation Titled “Integrating Risk Identification into Objective Setting (Decision Making) Process”. Others have used the term before as well, it will be interesting to hear what they had in mind when they used the term. Robert S. Kaplan once said “Managing Risks is Very Different From Managing Strategy. Risk Management Focuses on Negative -Treats and Failures Rather Than Opportunities and Successes” It is not clear what Robert S. Kaplan had in mind when he made this comment but what is very clear was his lack of understanding of Risk Management at the time. Risk Management has always been an Integral Part of Strategic Thinking, Strategic Planning and Execution, perhaps some Organisations and parts of the world may not have given Risk Management the same focus.
RiskForesights.COM‘s take is as follows; It has been observed by various Scholars and Thought Leaders that one of the variables that inform Strategic Planning is Strategic Assumptions and one of the aspects that Organisations look at when they are formulating their Strategic Assumptions are Anticipated Opportunities which then informs what Strategies should be adopted to exploit the Anticipated Opportunities.
When Downside Global Risks, Regional Risks, Country Risks, Industry Risks or even Organisational Level Risks are timely identified and responded to they become a Source of Opportunities for Businesses and Entrepreneurs. Risk Foresights Assist Entrepreneurs and Businesses identify Opportunities to Create Solutions to Optimize Risks. This point will be illustrated below using 2022 Global Risks as identified by The World Economic Forum as a Case Study.
Global Risk # 1 as identified by WEF is Extreme Weather Patterns. This will be / is an Opportunity for some Businesses and Entrepreneurs who will start creating Solutions to build Extreme Weather Resistent Stractures amongst many other Opportunities arising out of this Risk.
Global Risk # 6 Mental Health Deterioration. This presents an Opportunity to Mental Health Professionals and Healthcare Industry to start creating Solutions to respond to Mental Health needs of Citizens as an example.
Global Risk # 7 Cyber Security Risks. Already we are seeing Businesses and Entrepreneurs who have embraced the Opportunitues to build Security Operations Centres and many other Cyber Security Solutions.
Global Risk # 9 Digitally Inequality. One of the opportunities that arise out of this Risk is creating 4IR technologies that will be affordable to Low Income and Middle Income Countries in areas such as Education, Healthcare, Knowledge Management Ecosystems. Already there are Pioneers who have embraced these Opportunities.
#1 – Organisations over and above the Risks that they have identified as Significant in relation to their Vision and Business Objectives, they should also familiarise themselves with Global Risks, Regional Risks, Industry Risks and Country Specific Risks. This is where Institutional Gaps lie which are Opportunities that can be exploited to Drive Business Growth, Drive Innovation, Create New Industries and Technologies.
#2 – The other Opportunity Aspect of Risk lies in an Organisation’s ability to timely identify Industry Risks, Organisation Specific Risks and to timely respond effectively to these Risks. By so doing it gives an Organisation a Competitive Advantage over it’s Competitors. A recent Example is in the Restuarant Business where some Restuarants did not have Business Interruption Insurance for an unforeseen even like COVID-19 and neither did they have Cash Reserves set aside, they did not survive but those who learnt from the Boys Scout Motto of “Always be Prepared” and had adequate Business Interruption Insurance and cash Reserves successfully Optimised the Risk.
3 thoughts on “Opportunity Aspect of Risks Explained _ WEF 2022 Global Risks Case Study”
Interesting article with a lot to take away. With the example you gave about preparedness for business interruption its worth wondering how many insurers would have agreed on covering (the largely unforeseen likelihood of a pandemic and of the magnitude we have seen) under business interruption. Also the lessons learned I would think such a product or such type of cover is now is now available specifically covering loss due to a pandemic.
You spot on. On the Insurance side of things, in the context of South Africa they had actually refused to pay claims directly related to Business Interruption Lossed due to the Pandemic. Insurers were taken to court and they lost and had to honour Business Interruption Clams related to COVID – 19.
If Businesses and Entrepreneurs were to take time to understand Global Risks, Regional Risks (e.g. Risks in Africa), Industry Risks and Country Specific Risks to Identify Institutional Gaps that will be a source of Opportunity to create and innovate solutions to close the Institutional Gaps identified.
I agree with your point of view, your article has given me a lot of help and benefited me a lot. Thanks. Hope you continue to write such excellent articles.