To build more resilient organisations and societies, Risk Managers must adopt a long-term perspective and actively counter cognitive biases. This can be done by:
- Embedding strategic foresight
Organisations should consider integrating foresight practices such as scenario planning, trend analysis and horizon scanning into their decision-making processes to anticipate and prepare for future risks. This should be done in a governance framework that separates long-term risk processes from short-term operational risk management. - Cultivating a culture of long-term thinking
It is of great benefit if organisational leadership champions a forward-looking mindset, emphasising the value of proactive risk management over reactive crisis response. - Redefining metrics
Moving beyond short-term financial metrics to include long-term resilience and adaptability as key performance indicators. - Leveraging technology
AI-driven analytics and predictive modelling can enhance risk detection and provide objective insights that mitigate human biases. - Undertaking regular critical reviews
with peers of the parameters used to establish strategic targets, to avoid biases - Employing holistic thinking
and developing greater awareness of how risks can be intertwined, interconnected and interdependent.
The future is not an abstract concept but a tool that can and should be used to make informed decisions today. Most Risk Managers recognise the limitations of short-termism and the narrow operational focus on known risks but lack the tools or support to devote time and organisational attention to the emerging risk landscape. This paper proposes that by adopting strategic foresight methodologies and fostering a culture of long-term thinking, organisations can enhance their resilience and better navigate an increasingly uncertain world.
2.1 Foresight in risk management
In recent years, foresight has emerged from the field of strategic planning as a distinct and formal discipline. It is now increasingly recognised as a core competency requirement in many organisations. Some have even established new roles, such as Chief Foresight Officer. This underscores the relevance of the discipline and the importance that many large organisations attach to it.
Strategic foresight considers medium-to-long-term time horizons; the aim is not to predict the future. Rather, at a time when forecasts, projections and linear decision-making methods are not enough, strategic foresight aims to achieve a view of how the future might appear in the form of new assumptions, behaviours and realities.
The starting point for practising foresight, therefore, should always be to challenge the tendency to favour a ‘business as usual’ future and instead to explore viable alternatives. This approach can certainly enable more effective preparedness and future-proofing, but it requires a future-thinking mindset.
In an increasingly dynamic environment, as foresight becomes more mature as a discipline we are seeing foresight frameworks, methodologies and tools evolve as innovative approaches develop. Traditional risk management has always involved elements of hindsight, insight and, to a degree, foresight to help analyse the probability and impact of identified risks. However, many of today’s major emerging risks could potentially have been avoided, prevented or at least minimised if a foresight approach had been adopted. This not only applies to the four emerging risk trends outlined in this report, but – crucially – will also apply to those risks appearing on the horizon. Future-focused Risk Managers would benefit from adopting a foresight approach to their toolkit and scope to be better equipped to assess how risk assumptions, parameters and dimensions should be viewed going forward.
Risk foresight involves adopting a scientific and systematic approach to applying foresight techniques in risk management. And this is particularly true in the case of identifying and managing emerging risks. A foresight focus can help Risk Managers to be better prepared to deal with surprises posed by the Volatility, Uncertainty, Complexity and Ambiguity (VUCA) environment of the 21st century.
This FERMA NEXT report provides examples of foresight tools that are available for forward-looking risk professionals when considering and addressing emerging risks.
2.2 Strategic risk management tools to address emerging risks
Risk Managers employ various methodologies to address the emerging risks facing their organisations.
These tools, often used in combination with one another, can be used to help Risk Managers spot emerging trends, assess their potential impact and put in place strategies to manage, mitigate and transfer some of their effects.
Purpose
How it works
Scenario
planning
Helps organisations explore multiple plausible future scenarios and prepare for uncertainty.
Develops narratives based on key uncertainties and assesses their potential impact on strategy.
Horizon
scanning
Systematically tracks early signals of change across industries, technologies, regulations, and societal trends.
Uses sources like research papers, patents, expert opinions and trend databases to detect weak signals.
Bowtie
analysis
Leading
indicators for
risk detection
Identifies measurable and trackable (not necessarily quantitative) key performance indicators (KPIs) that serve as early warnings of emerging risks.
Focuses on proactive risk management by analysing data trends and detecting anomalies before a crisis unfolds.
The future
wheel
In this report, we will discuss some of the key risks facing European companies today and in the future, and explore potential applications of selected tools from this list.
Each trend will be illustrated by a 2×2 scenario matrix. Such tools can help prepare for the very different future pathways of a risk. A scenario matrix is constructed by using two key uncertainties that will significantly shape the risk landscape for European companies.
