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Following my article Making sense of risk in an interconnected world, you will now understand what our Dynamic Risk Assessment (DRA) is, and why today’s executives are turning away from traditional methods of measuring and monitoring risks.

There are four key stages of the KPMG Dynamic Risk Assessment:

1. Identify risk: Our team works with your key stakeholders to identify the key risks facing your organisation.
2. Survey: These key stakeholders complete an online survey, for the collection of data on the characteristics of the risks facing the organisation.
3. Analysis: Our team applies advanced network theory to the aggregated survey responses to identify the organisations interconnected risk network, and its dynamics.
4. Report: The DRA modelling allows organisations to see where risks can be expected to form critical clusters or trigger ‘contagion’ with other risks. We will collate this data into a report and discuss the findings with your organisation’s stakeholders.

This process enables us to:

● Capture the diverse experiences of individual senior executives within your organisation to map the group’s view on your expected contagion between discrete risks.
● Determine the expected speed (velocity) by which the risks can affect your operations.
● Determine whether individual risks can be expected to cluster together to form key concentrations of single risks.
● Determine whether individual risks may not necessarily form part of a risk cluster, yet pose significant contagion risk by virtue of the second order contagion, including to other siloes, it can be expected to trigger.
● Determine which risk mitigation plans offer you the highest payback in reducing the overall systemic risk profile.
● Obtain the collective views of the group’s depiction of your organisation’s systemic risk profile; which business practices require adjustment, cessation or expansion in order to respond to the group’s articulation of its systemic risk profile.

Here’s what some of our global clients have said about this process:
 

“The interconnectivity of risk was a light bulb moment for me.” - Chairperson, Global reinsurance company

“KPMG added real value. This helped us being a better risk team. We would now like to acquire the process.” - Global Head of Enterprise and Strategic Risk, GM

“This is exactly how I think about our Group’s risks. But nobody has ever shown it to me in this manner. Intriguing!” - Global CRO, State Street

If you’re interested in diving into this framework in more depth, check out this video put together by KPMG global: