Your Risks will Find you if you do not find them first

Latent Risks are those risks that you have that you are not aware of.
When you start out with a risk management program, you may find that you have many Latent Risks. One of the most important outcomes of the early stages of an ERM program is to drastically reduce the number of important Latent Risks. The “Enterprise” part of ERM means that you are making an effort to find and manage your previously Latent Risks no matter where they are in your organization.

Reality is that your Latent Risks will find you if you do not find them first.

The market is sometimes forgiving, especially if everyone misses some risk.  So avoiding risk management is, in effect, taking a bet  a bet that your competitors are not finding and dealing with their Latent Risks either.

The idea of Latent Risks is also important for existing ERM programs.  That is because the world keeps changing and firms will develop new risks and risks that they did identify earlier but dismissed as insignificant have now grown.  And those Latent Risks are the risks that are most likely to grow.  (see Risk & Light)

So it would be a good practice for firms with a well developed ERM program to regularly conduct a review of their Latent Risks to determine whether there are any that should be included more prominently in their ERM program.

Explore posts in the same categories: Risk Identification, Risk Learning


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One Comment on “Your Risks will Find you if you do not find them first”

  1. […] risks will find you if you do not find them first.” – David N. Ingram, CERA, FRM, […]

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