Emerging risks and challenges

Recent events demonstrate that it is important for organisations to continually identify emerging risks. Mike Sopp explores the measures that can be put in place to maintain organisational resilience.

Introduction

It can be said with some confidence that over recent times the risk profile of organisations has changed and continues to change rapidly, becoming more complex.

Major international events such as the pandemic, climate change and the war in Ukraine along with domestic events such as the Grenfell fire and current economic strain have had and will continue to have an influence on an organisation’s health and safety risk profile.

Horizon Scanning

Analysis of emerging risks and the adaptation of risk control measures to manage the risks deemed to be intolerable are essential elements if the health and safety management system and associated risk control measures are to be future-proofed.

Although this sounds straightforward, foresight to predict the future and reduce uncertainty is challenging. One approach utilised by organisations is horizon scanning.

According to the Institute of Risk Management (IRM), horizon scanning is a technique used to “look at complexity, challenge assumptions and review multiple ways that events could unfurl, in order to increase the resilience and reliability of their organisations”. It is a method for:

spotting potential causes of uncertainty
ensuring adequate preparation
exploiting opportunities
surviving threats.

The IRM publication, Horizon Scanning: A Practitioners Guide, provides useful guidance on the approach to take. This emphasises the need for a collegiate approach with appropriate research to identify emerging risks and then determine where more in-depth analysis or on-going monitoring is required.

In respect of research, the IRM publication notes that this can include data or information from external sources (such as professional bodies, industry leaders, customers and even competitors) as well as internal sources (the shop floor and C-Suite for example).

Useful external sources of information can range from high-level publications such as the World Economic Forum (WEF) annual Global Risk Report to more pertinent “horizon scanning” publications such as:

International Labour Organisation (ILO) publications
the Business Continuity Institute (BCI) annual Horizon Scan Report
EU OSHA European Risk Observatory publications
Health and Safety Executive Foresight Centre reports.

Where risks have materialised, this has the capability of changing the future risk profile. For example, as a result of the Grenfell fire, it is now known that there are numerous buildings in the UK with fire safety deficiencies associated with cladding and internal fire compartmentation. As a result of Grenfell, the UK fire safety regime is subject to significant change.

Emerging Risks and Challenges

All the above provide useful insight into factors that may influence the on-going risk profile of organisations.

From a global perspective, the latest WEF Global Risk Report makes sobering reading with over 40% of respondents predicting a consistently volatile environment with “multiple surprises” over the next three years.

84% of respondents felt “worried” or “concerned” about the future for the world. This position is likely to have significant impacts with mental health and wellbeing being cited as a significant concern.

This is a theme highlighted by the BCI in the 2022 Horizon Scan Report. This notes that, for example, “hybrid workplace environments are increasingly testing organisations and bringing additional risks from health and safety concerns to wellbeing issues”.

Looking forward, among the key business disruptions listed in the report’s top 10 include:

non-occupational disease
issues arising from remote working/new workplace environment
regulatory changes
lack of talent/key skills
health incident (occupational disease, reportable occupational disease, stress/mental health, increased sickness absence).

The BCI report notes that the main consequences of such disruptions are staff morale with wellbeing and mental health seen as the greatest consequence of disruption for organisations and secondly, staff loss was reported as a major concern in what is being referred to as the “great resignation”. The consequence of this could include the loss of health and safety-related knowledge.

The ILO report, Safety and Health at the Heart of the Future of Work, focuses on the four main ways that the workplace is changing along with the risks and opportunities associated with each. The four areas are:

technology through digitalisation and increased use/reliance on information communication technology
demographics associated with younger workers, an ageing workforce and migration
sustainable development and issues relating to climate change and the green economy
work organisation including working hours/patterns, forms of employment and the informal economy.

Although no longer in the European Union, the European Agency for Safety and Health at Work produces useful reports and publications.

For example, they recently published a report on risks associated with digital platform work noting that this type of work is “concentrated in sectors and occupations that are generally considered more dangerous, such as the transport sector” and that “specific characteristics of digital platform work aggravate these challenges and complicate the implementation of a sound health and safety policy”.

The UK Health and Safety Executive also undertake horizon scanning and produce subsequent reports. The Foresight Report, The human impact of the changing nature of work, identifies five areas in which work is changing:

new work equipment and tools with increased automation and wearable devices
changes in workforce characteristics such as the ageing workforce and labour shortages
changes to working environment such as net-zero carbon economy and work intensification
different skills, knowledge and information having to keep pace with change
new ways of organising and managing work such as the gig economy and new delivery models.

Taking Action

Clearly when undertaking a horizon scanning exercise, there is a need to contextualise this so as to make it organisational specific with the following outcomes:

better understand the emerging risks and challenges and impact on organisational H&S policy and strategy
identify gaps in understanding and the necessary research needed to address this
build consensus among stakeholders about the emerging risks and how to tackle them
identify and make explicit some of the difficult policy choices and trade-offs that may need to be made in the future
create a new policy and strategy that is resilient because it is adaptable to changing external conditions
mobilise stakeholders to take action in terms of risk control measures.

The IRM publication noted above highlights the role of risk assessing in this approach stating that “risk assessment and rating is a critical element of the horizon-scanning process as it helps to determine the key risks and opportunities which need focussed attention”.

However, the process should also look at opportunities that may be available from changes. As a simple example, automation may eliminate risks that employees may be exposed to. Other key factors to take into account are:

timescales for emerging risks
interconnection of risks (for example, business disruption and reputation).

A key challenge will be organisational buy-in to manage emerging risks within the relevant risk tolerance of the organisation.

This will require good communication and engagement with relevant stakeholders, not least with senior management who may be required to make strategic decisions.

The IRM recommend that organisations develop a framework for categorising emerging risks in order to develop a system of review and assess their potential impact on the business in the context of the risk appetite of the organisation.

Summary

Organisations do not stand still but evolve and adapt to changing environments in which they operate. Failure to do so can have significant impacts unless emerging risks and challenges associated with change are managed appropriately.

This includes emerging health and safety risks that may be generated directly by changes such as the use of new technology or brought about through the interconnectivity of more strategic risks.

Horizon scanning is a means of identifying emerging risks but should not be used in isolation. It complements other disciplines such as trend analysis, stress testing and driver mapping (eg STEEPLE study).

Although emerging risks may not require immediate risk control, they may require thought and consideration for future changes to organisational H&S policy and strategy requirements.

As such, it is essential that there is early engagement with stakeholders to ensure that the organisation is able to adapt and remain resilient.