How to Identify and Mitigate Emerging Risks for Stronger Crisis Resilience

In today’s hyper-connected, rapidly evolving world, businesses face new risks every day. What once seemed stable can shift overnight due to technological disruption, geopolitical tensions, cyberattacks, regulatory changes or unforeseen global events (think COVID-19 or the Ukraine crisis). The real danger? Emerging risks - those that aren’t on your radar yet but can severely disrupt operations if left unchecked. Unlike known risks, which can be managed with existing frameworks, emerging risks are uncertain, fast-evolving and often poorly understood until it's too late.

In this article, we'll break down how to identify these threats early and develop strategies to mitigate emerging risks - strengthening your organisation’s resilience and enhancing your ability to respond effectively to crises.

1️⃣ What Are Emerging Risks? A Clear Definition

Emerging risks are new or evolving risks that:

• Are unpredictable and lack historical data.

• Have high potential impact but low current visibility.

• Are often driven by technological, economic, regulatory or societal shifts.

Examples of Emerging Risks:

🔍 Technological Risks: AI misuse, deepfake fraud, quantum computing threats to encryption systems.
🌍 Geopolitical Risks: Rising tensions between major economies, trade wars or sanctions impacting global supply chains.
🌐 Cybersecurity Risks: New types of ransomware attacks or vulnerabilities in IoT (Internet of Things) devices.
🌡 Environmental Risks: Climate change-induced natural disasters or resource scarcity.
🧠 Psychosocial Risks: Employee burnout or mental health crises affecting organisational productivity.

Why Emerging Risks Matter:
Businesses that fail to anticipate these risks can suffer reputation damage, financial losses, legal consequences and supply chain disruptions. Early detection and mitigation strategies are essential for staying ahead.

2️⃣ The Early Warning Signs: How to Identify Emerging Risks

The key to effective risk management is early detection. Here’s how to proactively identify emerging risks:

Environmental Scanning

Continuously monitor global trends across political, economic, social, technological, environmental and legal (PESTEL) factors.

Example:

• Track geopolitical tensions, economic sanctions, and regulatory updates that could impact global operations.

• Use AI-powered risk monitoring tools for real-time updates on potential risks.

• Monitoring social media for trending complaints could reveal early signs of a PR crisis or product failure.

Data Analytics and Predictive Modeling

Leverage big data analytics and predictive AI models to detect unusual patterns that could signal emerging risks.

Example:

• Financial firms use AI-driven fraud detection systems that flag suspicious activities before financial crimes escalate.

• Supply chain operators employ predictive analytics to detect potential disruptions in sourcing materials or manufacturing delays.

Internal and External Stakeholder Feedback

Encourage open communication with employees, suppliers and partners who might detect risks faster at the operational level.

Example:

• Regular employee feedback sessions could reveal operational bottlenecks or safety hazards.

3️⃣ Key Tools for Emerging Risk Identification

AI-Powered Risk Detection Platforms

AI tools help organisations detect patterns and trends that humans might miss.

✅ Benefits:

• Faster data analysis

• Predictive risk models

• Automated alerts for unusual activity

Scenario Planning Tools

Develop hypothetical crisis scenarios and assess how your organization would respond. This highlights weaknesses and gaps in your crisis response strategy.

✅ Example Scenarios:

• A global cyberattack targeting your industry

• Sudden geopolitical disruptions affecting supply chains

• Unexpected leadership changes in your organization

Crisis Simulations and Exercises

Regular crisis simulations help leaders and teams practice responding to emerging risks under pressure. CrisisCompass offers custom-designed crisis simulations that help businesses practice real-world responses to emerging threats.

4️⃣ How to Mitigate Emerging Risks: A Strategic Framework

Once emerging risks are identified, the next step is mitigation. Use this structured approach:

Step 1: Prioritise Risks Based on Impact and Likelihood

Assign a risk score based on:

• Probability of occurrence

• Potential impact on business continuity

• Cost of mitigation vs. cost of inaction

Step 2: Develop Mitigation Strategies

For each high-priority risk, create actionable mitigation plans:

• Cyber Risks: Invest in advanced cybersecurity measures (firewalls, intrusion detection systems).

• Regulatory Risks: Regularly update compliance frameworks to match evolving regulations.

• Environmental Risks: Develop sustainability practices and diversify suppliers in case of resource shortages.

Step 3: Build Organisational Resilience

Develop comprehensive business continuity and disaster recovery plans that ensure operations can continue even if a risk materialises.

Step 4: Train and Educate

• Conduct regular training sessions for employees to raise awareness of emerging risks.

• Use tabletop exercises to improve decision-making in crisis situations.

Step 5: Monitor and Adjust

• Regularly update risk assessments to account for changes in global conditions.

• Integrate real-time monitoring systems for continuous risk detection.

5️⃣ Case Studies: Businesses That Got It Right (and Wrong)

✅ Success Story: Nestlé’s Supply Chain Resilience

Nestlé proactively identified emerging supply chain risks related to climate change. By diversifying suppliers and investing in sustainable practices, they reduced the risk of raw material shortages and improved their global operational resilience.

❌ Failure Story: Kodak’s Digital Disruption Blindspot

Kodak failed to recognise the emerging risk of digital photography early enough. The company’s inability to pivot and mitigate technological disruption risks led to its downfall in the digital age.

6️⃣ The Role of Leadership in Managing Emerging Risks

Leadership plays a pivotal role in recognizing, assessing, and mitigating emerging risks.

Essential Leadership Actions:

• Foster a risk-aware culture within the organisation.

• Ensure clear communication channels for reporting emerging risks and encourage staff to do so.

• Support investments in technology and tools to enhance risk detection and response.

• Develop a crisis-ready mindset by leading regular crisis simulations and risk workshops.

7️⃣ Common Mistakes Businesses Make with Emerging Risks

❌ Ignoring Early Warning Signs: Businesses often dismiss minor incidents until they escalate.
❌ Overconfidence Bias: Believing “it won’t happen to us” leaves organisations vulnerable.
❌ Underestimating the Ripple Effect: A minor disruption in one area can trigger larger systemic failures across the organisation.

Business Lesson: Proactive risk management saves time, money and reputational damage in the long run.

Conclusion: Future-Proofing Your Business

The pace of change means emerging risks are a constant threat. However, businesses that stay vigilant, continuously monitor their environments and develop flexible mitigation strategies will be better positioned to handle crises when they arise.

Key Takeaways:
✔ Emerging risks are fast-evolving and unpredictable - early detection is critical.
✔ Leverage AI, predictive analytics and scenario planning to stay ahead.
✔ Develop a proactive mitigation strategy to strengthen your organisation’s resilience.
✔ Leadership must drive a risk-aware culture from the top down.

Want to stay ahead of emerging risks? CrisisCompass offers advanced risk assessment tools, crisis simulations and resilience-building strategies tailored to your business needs. Reach out to see how we can help embed a culture of risk mitigation in your organisation.