How do you manage risk when the future is unclear?

Managing risk in an uncertain future requires a combination of strategic planning, flexibility, and adaptability. Here are some steps I follow: - Assess Probability and Impact: This assessment helps prioritize which risks need the most attention and resources. - Maintain Liquidity: Keep some of your resources liquid, meaning easily accessible, so that you can quickly respond to unexpected events or opportunities. - Scenario Planning - Establish Risk Tolerance -Cultivate Agility: Build a culture within your organization that values adaptability. Remember that it's impossible to eliminate all risks entirely, especially in an uncertain future.

Future is always unclear! This fact is the reason why we have risk management as a discipline in the first place. When assessing your business environment, using PESTLE might give you more advantages as the framework incorporates broader economic and forward-looking factors. Also don’t forget that many opportunities are created during times of uncertainty. Use the SOAR (strength, weaknesses, aspirations, and results) framework to assess potential opportunities that may arise in the market as volatility soars.

You can consider various Agile methodologies for risk management. Incremental planning and review with defined sprints and user stories will definitely help in addressing risk, when future is unclear

The future is unclear! It would be great if we were clairvoyant and had the ability and perception to see into the future in order to to mitigate potential risks. Unfortunately, that's not going to happen! At least not for me or for the companies and organizations I help design, structure, and implement risk management programs and risk-transfer processes. The best you can do in times of uncertainty is to be objective in your risk assessments. This means not being an optimist or a pessimist, but a realist. One way to remove your personal biases or feelings out of the equation is by preforming a quantitative risk assessment or analysis with a focus on numerical values of risks present to determine potential risk.

Monte Carlo simulations will allow you to predict the probability range of possible outcomes but it likely won’t make it easier to embrace the uncertainty. The acceptance of uncertainty stems from acknowledging the fact that risk acceptance is one of the possible risk responses. The more you gain objective knowledge about your operational and financial posture, the easier it will be to assess potential implications of risk acceptance.

Another term for “planning for contingency” is the risk management cycle. As you assess new emerging risks, associated with the times of uncertainty execute the entire risk management cycle: identification of new risks, evaluation of risks’ impact, decision on how to respond to those new risks and establishment of the right mitigating or compensating controls to alleviate the impact of risks.

What I have learned over the years of my career as a risk management professional is that you cannot forecast or anticipate Black Swan events. Could any Risk Manager anticipate the tragedy of 9/11/2021? Or the impact of the Coronavirus Pandemic? Or the recent devastation of the Maui, Hawaii flash fires? Always remember the #1 Rule of Risk Management: Hope for the Best. Plan for the Worst.

Learning from past experiences is tremendously important and valuable. However, remember that risk management is a forward-looking function, attempting to predict the unknown. As you execute risk management, incorporate lessons learned but don’t forget to envision the factors that have not been yet experienced.

Risk management is always a cross-functional exercise. If you do not engage internal and external stakeholders, your analyses are at risk (no pun intended) of being one-sided, limited and biased.

Risk management indeed involves collaboration across various functions within an organization. It’s a collective effort that draws on expertise from different areas to identify, assess, and mitigate risks. Here’s why it’s a cross-functional exercise:

Risk culture and risk appetite are the foundation that largely guide your risk management actions and capacity. Make sure that you are aligned with those fundamentals as you build your operational resiliency. As you progress in your journey, revisit risk culture and appetite to adjust them accordingly. Do not let them get stale.

Sound good and fit for a situation of the unknown. Looking into the future comes with uncertainty and fear. With the right laiddown plan to execute you are good to go.

It is critical to assess opportunities as part of your risk assessment so that you can manage the effect of uncertainty on your strategic goals and objectives from threats and are ready to seize the right opportunities. Also, you must institutionally practice (in order to accelerate the pace with which you iteratively navigate) a SODA or OODA loop/Agile sprint. The faster your organization can observe, orient, decide, act, and then repeat, the better positioned it will be to process through dynamic situations. It helps if the risk owners have readied additional risk treatments that may be needed so that those additional treatments can be rapidly deployed at the "D" stage of the OODA loop.

Transparent communication is something I would add on to the topic. As a risk manager who lives and works in Myanmar where uncertainty is the only certainty for the future, we learn to accept the uncertainty and prepare for those uncertainty by having various scenarios planning, analyze the outcomes and then, mitigate things that could be under our controls and communicate to relevant stakeholders especially Board and employees of those process transparently. Worst thing could happen to your Board and Employees is that having to navigate the uncertainty without having any information.