In these turbulent times, organisations need to approach risk assessment with fresh thinking and innovative solutions. As volatility becomes the norm and the past is no longer an indicator of things to come, seemingly separate risks can become inextricably linked. As demonstrated recently by the COVID-19 pandemic, the risks we now face are unpredictable, contagious and globally connected, which means that assessing our risk exposures is challenging.
Focus needs to shift. It’s more important than ever to understand and monitor emerging risks and be aware of the “out of trend” risks that could arise in this age of disruption.
KPMG’s Dynamic Risk Assessment (DRA) is an evolution in risk assessment. In addition to the traditional measures of risk severity and likelihood it also considers risk interconnectedness (risks that link together) and velocity (expected speed with which risks will affect operations). This approach allows for risk prioritisation – rather than focusing on the largest or most frequent risks, it helps you identify the risks that are most connected and reflect the greatest systemic threats to your organisation.
The DRA process uses the scientific consensus methodology of expert elicitation, through interviews and workshops, to collect the data used for analysis. This data is ingested through our network theory analysis tooling, which utilises mathematics and advanced data analytics together in a KPMG proprietary methodology to identify, connect and visualise risk in three-dimensions. This analysis produces unparalleled risk insights which look beyond conventional depictions of risk by taking into consideration risk interconnectedness and the velocity with which risks can impact business operations.
These fresh insights arm clients with new levels of risk insight, that work to enhance understanding of their risk profiles for more-informed decision making. Key features of and insights from the DRA process include:
Further details are included in the DRA brochure included below. We also include some insights into how DRA has been used to identify risks facing cities as a result of COVID-19 below.