15.3 Changing knowledge and skills

Question 1

What four techniques does Ashby list for assessing and controlling emerging risks?

Answer 1

1 Board level strategic assessments
2 Scenario planning and reverse stress testing
3 Resilience and reputation risk management
4 Fostering a culture of creativity, mindfulness and situational awareness

Question 2

Why are boards best placed to understand risks from the broader strategic environment?

Answer 2

Because the board members are likely to have knowledge of different organisations and sectors

Question 3

What technique can be used to faciltiate a strategic environment emerging risk discussion?

Answer 3

PEST analysis

Question 4

What does PEST stand for?

Answer 4

Political
Economic
Social-cutural
Technological

Question 5

What is scenario planning?

Answer 5

A structured way for organisations to understand their future, as well as the risks and opportunities that may be associated with this future.

Question 6

Define systems thinking.

Answer 6

A structured thought process that involved mapping out systems and the relationship between systems.

Question 7

What is the purpose of reverse stress testing?

Answer 7

To assess th circumstances under which the organisation will become non-viable.

Question 8

Give one example of a reverse stress test scenario that may be used by an organisation.

Answer 8

A major financial crisis
A major economic recession
A major loss of assets (eg. fire, fraud)
A PR disaster that damages stakeholder confidence

Question 9

Which industry most commonly undertakes reverse stress testing?

Answer 9

Financial services (e.g. required by PRA)

Question 10

Which three current examples of emerging risk does Ashby highlight?

Answer 10

Networked economy
Social media / digital narratives
Disruptive technologies

Question 11

Which phenomenon has led to the “networked economy”?

Answer 11

The internet of things

Question 12

What risks are associated with the internet of things?

Answer 12

Cloud based computing and home devices create vulnerabilities.

Question 13

List two new risks associated with the rise of social media use.

Answer 13

Personal privacy concerns
Fake news
Reputation storms (and cancel culture)

Question 14

What is a digital native?

Answer 14

Individuals born since 1990, who do not remember a time before the internet and social media.

Question 15

Give an example of a disruptive technology.

Answer 15

Crowdfunding (replacing traditional finance)
Peer-to-peer lending
App-based product ordering / payments
Transportation (e.g. Uber)
3D printing
Price comparison services

Question 16

Why do disruptive technologies present risks for established organisations?

Answer 16

New organisations are likely to be better able to embrace technology (no relic systems)