In today’s highly interconnected and volatile world, dominated by new technology and emerging business models, the past is no longer a reliable guide to the future. Past data is a poor fit for the future as the forces and trends that shape our future have increasingly not manifested themselves before. Moreover, risks combine. They spillover into each other—they do not occur neatly in isolation—and we no longer have the luxury of dealing with risks discretely.
We need to consider whether and how risks can potentially cluster together, as well as the potential cumulative impact of such clusters. We need to advance beyond historical risk analyses comprised of two-dimensional depictions through expected probability and severity.
This requires us to consider a third, and also a fourth dimension: velocity and contagion. This, together with the consideration of the global trends that are shaping our world, is what Dynamic Risk Assessment (DRA) does.
Join KPMG LLP for a webcast to discuss DRA and how it can be used to planning during uncertain times.
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Read our three part Enterprise Risk Management thought leadership series for more insights.