A characterisation of emerging risks

In the concept note on improving the management of emerging risks, IRGC suggests a categorisation of emerging risks according to three prototypes, in relation to the potential impacts of the emerging risks and to the management strategies that will be recommended.

A. High uncertainty and a lack of knowledge about potential impacts and interactions with risk absorbing systems:

Risks with uncertain impacts, with uncertainty resulting from new products, services, behaviours or regulation (as a result of social dynamics, including advancing science and technological innovation). The dominant feature of this category is a lack of knowledge and experience about consequences that could result from deploying new technology, in the form of new processes and products. The governance issues for category A risks deal with the decision to allow such products, services, behaviours or technology in commerce, and the implementation of appropriate risk management measures to avoid or mitigate potential adverse consequences. Current examples include products and processes in nanotechnology or synthetic biology.

B. Increasing complexity, emerging interactions and systemic dependencies with the potential to lead to non-linear impacts and surprises:

Risks with systemic impacts, stemming from technological systems with multiple interactions and systemic dependencies. The defining feature of category B risks is a loss of safety margins due to high levels of connectivity and interdependence. In the case of technological systems, the main issue here is not the risk of the technologies (this may be known or well-estimated), but the interactions of these risks with other types of risks or activities that could lead to non-linear impacts or surprises. Examples of complex interconnected systems are numerous in energy, transportation, communication, and information technology.

C. Changes in context (whether this change is in societal/behavioural trends, regulation, or the natural environment) may alter the nature, probability and magnitude of expected impacts:

Risks with unexpected impacts, where new risks emerge from the use of established technologies, products or processes in evolving environments or contexts. The main problem here is that the potential impacts of familiar technologies, processes or products (both in terms of probability and magnitude), may be altered if they are operated or used in a different context or organisational setting. Governance of these risks would seem well established, but may in fact be inadequate. The change in context that makes for an emerging risk may involve ageing of infrastructure, complacency, and/or overconfidence in the ability to deal with unexpected events. The commercial aviation industry provides a useful example of the importance of effectively managing category C risks.