Every business is facing one or the other form of risk today. Especially the emerging risks are affecting the global economy. What exactly is an emerging risk, you wonder? Well, it is exactly as the name suggests; it is still emerging. It is similar to having anxious thoughts about business or the business's financial health.
Moreover, such risks are hard to predict, and they take a toll on the financial and economic health of the firm. Businesses spend over a hundred and fifty billion per year on risk management. Still, crises like the pandemic are unforeseeable and unpredictable. It is the epitome of the result of emerging risks.
According to Gartner, Australian businesses spent over four billion dollars on risk management in 2021.
This blog discusses this further to help you understand it better and incorporates emerging risks cases study examples that you may refer to for your coursework.
Firstly, the risks that are unforeseen and are still under development to be accessed are called emerging risks. Such risk factors affect an organisation’s strategies and future action plans. The easiest method to identify emerging risks is to determine the validity of the underlying strategy and assumptions.
Moreover, the fundamentals of a business eventually change per the business strategy. The underlying strategy is to focus on the critical assumptions that rule the risk management in a business. Monitoring the external environment to detect the changes that invalidate a few or several assumptions in the business strategy.
Also, when you write an emerging risks case study, you must pay attention to the global trends. Such trends are key indicators that help access the emerging risks in the internal/external environment or the economy as a whole. The COVID-19 crisis is a great example of emerging risks as no one could forecast such global economic crises.
As per the “World Economic Forum” (WEF) report on global economic risks, there are five main categories societal, environmental, economic, technological, and geopolitical. The majority of external factors influence a firm to develop in these areas. However, the WEF also organised the various risk factors into two global categories “economic disparity and global governance failures”.
Did you know that the “World Economic Forum” was established in 1971 and initially called the “European Management Forum”?
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Secondly, the biggest challenge to the global economy is to beat the emerging risks. The majority of such risks are due to the aftermath of the pandemic. You may explore the emerging risks case study examples in the global economic crises since 2020. So, per the World Economic Forum 2022, here are the five major emerging risk factors:
The recession and unemployment rates surged due after the Covid-19 spread. The forecast for the global economy is 2.3 per cent lower than the original prediction before the pandemic. Also, the emerging variants pose a risk to the global economic recovery as the commodity prices increase thirty per cent more in 2022 than at the end of 2020.
Furthermore, the varied global economic states entail the vaccination rates. The difference in economic levels is the reason for economic divergence. Establishing the vaccination protocols may result in lower investment in countries with less vaccination percentage.
In addition, the World Bank reports that twenty per cent of the global rich population will recover half of their financial assets by 2021. In contrast, the poor face an additional five per cent loss in their income. This difference is eroding social cohesion. You must explore this topic further for your emerging risks case study.
Besides, the increasing geopolitical tension is another factor for economic unrest. The tension between the US and China is increasing. The ongoing Ukraine-Russia war feeds the fire to the flame. Such tension results in inflation and a further increase in commodity prices.
Moreover, climate change is a leading cause of depleting resources. Failure of the climate action plan is the most concern-worthy emerging risk factor for the global economy.
CO2 levels are at the highest in the past two million years, causing climate change. - Earth.org
The biggest challenge the global democracies and any business face is the emerging risk. If it were somehow predictable to decipher such risks, it would help lower the losses. The ideal method is researching and curating an action plan that incorporates all such unforeseeable risks. But, the easy way is to focus on the trends.
Additionally, the trends are the focal point for determining the emerging risks in an enterprise. Global enterprise risk management trends help businesses prepare for the grey areas in the action plan. You must consider these top-five trends:
Next, businesses are moving forward with accepting a risk maturity framework that manages all the vulnerabilities. Interconnecting all the risk factors to monitor them collectively is a valent method.
The GRM or “Governance risk and compliance” are all a firm's risk management policies. The ERM or “Enterprise Risk Management” action is more effective with the compliance policies. Businesses are upgrading to automated ARMs that possess this function. It is a leading trend you may use in your emerging risks case study.
Further, a risk appetite statement supports smooth communication between the investors, managers and employees. Some emerging risks involve extensive loans. Hence, a risk appetite statement helps banks set a safety baseline to avoid fraud transactions.
Obviously, you are aware of this trend. It is not exactly a trend per se. Such a committee is primary for any business project. But, recently, businesses are investing more to hire risk management experts to develop action plans and responses to emerging risks.
Lastly, the risk factors in a firm consist of many departments and processes. The additional coverage of cyber and companies’ physical assets in the risk management process is necessary. Firms are turning to automated cyber risk management for the same.
Per Cybersecurity reports, the world may lose over ten trillion dollars by 2025 in cyberattacks.
These are the top five trends in enterprise risk management. Automated ERM and more focus on the physical and cyber assets are part of every firm’s risk management action plan. The losses in a firm are huge, and the losses at global economic levels are way greater. So, democracies and businesses spend more on risk management to beat emerging risks.
In conclusion, you learn the definition, reason, and solution for the emerging risks. Emerging risks are unforeseeable circumstances/issues that arise in a firm or at the economic level. As a management student, you must learn this concept thoroughly before curating a case study. Here are six steps you must follow when developing a case study:
Follow these steps, and you’re good to go. If you still face issues drafting, researching or referencing, you can always get help. Fill out the enrolment form to get case study help from our academic writing experts. After you fill out the form, you can access our digital library for free and get sample case studies.
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