We live and work in a joined-up world. When it comes to business, this has many advantages, but there are also hazards that go along with these chains of digital and social interconnectedness. Local events such as political upheaval or terrorist attacks can have wider reaching effects outside their immediate sphere of influence, while cyber attacks or sudden market volatility can bring down businesses and institutions with devastating speed.
This new business threat has a name: ‘connected risk’. Risk modelling experts Russell Group define connected risk as “the systemic impact on commercial organisations, their partners, suppliers and clients from cumulative and cascading financial, operational and reputational fluctuations and uncertainties”.
The cause, they say, is “an inherent weakness in the inter-connected architecture” of businesses. Because these connections are increasingly digital, this means even a single negative event can spread severe financial, operational and reputational damage both within and between organisations.
In an increasingly connected world, organisations need to prepare themselves, and their networks, to mitigate these connected risks, as well as putting measures in place to respond to unpredictable ‘black swan’ events. RFIB looks horizontally rather than vertically at these types of problems to seek connected solutions for our customers.