“The primary risk outcome from this crisis is the blurring of distinctions between business risks to be managed by companies, and national, international or systemic risks to be handled by governments and their agencies.”
Jonathan goes on to illustrate how risk can be envisioned as operating in concentric circles around a company's business, from everyday risks concerning products, services, customers, competitors etc to "outer orbit" risks - terrorism, international conflict and global pandemics - that have been viewed historically as beyond the control, or even influence, of corporates and, therefore, not a species of risk that corporates would actively track, manage or prepare for.
"Of course, the concentric circle matrix is far too simplistic a tool for deliberating corporate risk. In the real world, issues bleed from one layer into the other," he writes. "This blurring between the various levels and perceived likelihood of risk is a trend companies and directors must be alive to, because it reflects how readily the outer reaches can translate into tangible impacts on business."
"The way forward in dealing with tail risk issues is for us to be having a more permanent and prominent conversation around the profile and management of once-inconceivable disruption.”
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