Using risk connectivity and contagion to add value – how analytics are revolutionising the approach to risk
Caron SugarsKPMG, 235 St George’s Terrace, Perth, WA 6000, Australia. Email: ccobargsugar@kpmg.com.au
The APPEA Journal 58(2) 621-624 https://doi.org/10.1071/AJ17114
Accepted: 22 February 2018 Published: 28 May 2018
Abstract
Companies are seeking more agility in how risk is managed. Businesses need a real-time view of risks underpinning decision making and, in an increasingly connected world, they want to plan for what is on the horizon to create competitive advantage. Management and boards are also asking questions about how strategic risks focus on, compare against and map to the well-grounded operational risk profile. Applying network theory, analytics and artificial intelligence creates an opportunity for risk management to drive strategy, reduce costs and add rigour to decision making. The significant competitive advantage gained through thinking about risk differently and incorporating greater focus on emerging risks can establish the resilience needed in a rapidly changing world. This paper considers how resilience, profitability and ultimately competitiveness can be enhanced through the application of technology, analytics and network theory to understand the interconnectivity, contagion as well as aggregation of risks and mapping of operational risk profiles to strategic risk profiles.
Keywords: agility, artificial intelligence, big data, connectivity, data, decision making, megatrends, National Energy Resources Australia, NERA, operational risk, Risk Function of the Future, risk management, risk structure, strategic risk, strategy, systemic, VUCA.
Caron Sugars is a Partner within KPMG Risk Consulting who specialises in risk management for the energy and natural resources sector. Having worked in Australia and Africa, she has been with KPMG since 2007. Caron is a Chartered Accountant (South Africa), a Fellow of the Governance Institute of Australia and a Graduate of the Australian Institute of Company Directors’ Company Directors Course. |
References
Johansen, B. (2012). ‘Leaders Make the Future.’ (Berrett-Koehler Publishers)National Energy Resources Australia (NERA) (2017). Sector competitiveness plan. WA Department of Industry Innovation and Science of Australian Government, Kensington.
Sugars, C., and McAuliffe, T. (2018). The mining risk function of the future. KPMG. Available at: https://home.kpmg.com/au/en/home/insights/2018/01/mining-sector-risk-function-future.html
World Economic Forum (2018). The global risks report. World Economic Forum, Geneva.