Signals

Signals

Understanding What May Be Changing Around Us

Risk Management is not only about managing risks that we already know. Sometimes the more difficult task is recognising that something around us is changing before we fully understand what that change may mean. New technologies emerge, regulations develop, political relationships shift, consumer behaviour changes, populations age, climate conditions affect businesses and new ways of living and working gradually become established. Some of these developments disappear without having much impact, while others eventually change industries, organisations and everyday life.

This is the purpose of Signals. This section looks at developments that may tell us something about what could be ahead, without assuming that every new development will become a major risk or that the future can be predicted with certainty. We have divided Signals into Emerging Risk, Weak Signals, Future Trends, Geopolitical Risk, Technology Trends, Climate Risk, Regulatory Change and What the World Is Watching. Rather than becoming another news section, the intention is to interpret developments and ask what they could mean for individuals, businesses and organisations.

How Signals Relates to the Pillars of Risk Management

Signals has a strong relationship with the traditional Pillars of Risk Management, particularly Enterprise Risk Management, Risk Assessment, Operational Resilience and Business Continuity. Depending upon what is developing, a signal may also lead us into Technology Risk, Cyber Risk, Governance & Compliance or Third-Party Risk.

The difference is largely one of timing. Traditional risk assessment generally begins once we have identified something that could affect an objective. Signals can begin earlier, when we are still asking whether something developing around us deserves our attention at all.

For example, a new technology may initially appear simply as an interesting technology trend. If businesses begin depending upon it, questions involving Technology Risk, Cyber Risk, third parties and operational resilience may emerge. A proposed regulation may initially be something to monitor before eventually becoming a Governance & Compliance consideration. Geopolitical developments may appear distant until they begin affecting suppliers, transportation, energy prices or markets, at which point they may become relevant to Enterprise Risk Management, Third-Party Risk, Business Continuity or Operational Resilience.

In this sense, Signals sits naturally alongside the established Pillars of Risk Management. It helps us observe what may be developing before deciding whether it has become a risk that needs to be assessed or managed.

Signals, Surprises and Hindsight

Not everything gives us a clear warning. COVID-19 demonstrated this particularly powerfully. Pandemic risk itself was not unknown, yet the speed and scale at which COVID-19 affected everyday life and business still took many people and organisations by surprise. Travel, workplaces, supply chains, customer behaviour and normal business operations were disrupted at the same time. It reminded us that knowing a risk exists is very different from knowing exactly when it will happen, how it will develop and how severely it will affect us.

This is one reason Signals should not be mistaken for prediction. Sometimes we identify an early signal correctly. Sometimes the signal exists but we underestimate its importance. Sometimes events develop so quickly that there is little useful warning. This is where Signals connects particularly strongly with Operational Resilience and Business Continuity. We may not be able to predict the event, but we can still consider whether we are capable of responding when circumstances change unexpectedly.

There is also another very human situation: sometimes we see something developing and simply sit on it. We may think the probability is low, the evidence is insufficient, action is too expensive or there is still plenty of time. If the event eventually happens, it can suddenly appear obvious in hindsight. People ask why nobody acted when the warning signs were already there.

Hindsight, however, has information that the original decision-maker did not have. Before an event happens, an important signal may be surrounded by many other signals that eventually amount to nothing. Good risk thinking therefore does not mean reacting to everything. It means considering the information available at the time and asking whether we should act, investigate further, continue watching or consciously accept the risk of waiting. We may still regret a decision later, but there is a difference between having ignored something and having considered it properly before deciding not to act.

One lesson that I learnt was the price of Gold. Nobody expected this big surge in gold prices. And even though we had theories we had signals but nothing prepared us for this upside. I know plenty of people who sold their gold thinking they already know the gold market so well in Year 2022. 

Separating Signals From Noise

One of the challenges today is that we have access to an extraordinary amount of information. A trend can appear important simply because everybody is talking about it. Something can go viral without becoming a lasting change, while a development receiving very little attention can eventually become highly significant.

This is why weak signals, emerging risks, horizon scanning and early-warning indicators are useful concepts within this section. They encourage us to look for changes without automatically treating every change as a threat. We can examine the evidence, consider whether several developments are forming a pattern, ask what would need to happen next for the signal to become more significant and determine what would cause us to take action.

Signals also connects with The Science of Risk because probability, uncertainty, complexity and interconnected risks influence how we interpret what we observe. Several apparently separate developments can sometimes interact. Geopolitical tension can affect energy and supply chains; supply problems can affect costs; economic pressures can alter consumer behaviour; technology can change employment and regulation can subsequently respond. Understanding these relationships can be more useful than looking at each development in isolation.

Using A.I. to Help Us Watch for Change

A.I. and large language models can be useful tools within Signals because they can help us search, organise, compare and summarise large amounts of information. They may help individuals and smaller organisations conduct forms of horizon scanning that previously required far more time and research resources. They can also help us explore different scenarios and identify connections that deserve further investigation.

However, A.I. does not remove the need to verify what we are seeing. An LLM can be wrong. It may rely on poor information, repeat speculation or present an uncertain conclusion with considerable confidence. A frequently repeated idea is also not automatically a genuine trend.

This creates an interesting link between Signals, A.I. & Risk and Trust. Before asking what a signal means, we may first need to establish whether the signal itself is genuine. Misinformation, disinformation, manipulated content, deepfakes, synthetic reports and even ordinary exaggeration can create the appearance of a trend that does not exist. As our information environment becomes more complex, information integrity becomes part of how we interpret emerging risks and future trends.

What We Will Explore Under Signals

The Emerging Risk section looks at risks that are developing, changing or not yet fully understood, while Weak Signalsexamines the earlier indications that something may be starting to change. Future Trends looks at broader developments that could influence society and business over time. Geopolitical Risk considers international developments and how their effects can travel through markets, supply chains and organisations. Technology Trends follows emerging technologies and the ways in which different technologies may begin to converge.

Climate Risk considers changing environmental conditions and their potential implications for organisations, infrastructure, communities and continuity. Regulatory Change looks at how changing laws, regulations and expectations can eventually become business considerations. Finally, What the World Is Watching provides a place to examine developments across technology, geopolitics, climate, healthcare, finance, A.I., regulation, demographics and consumer behaviour—not merely to report what happened, but to consider what it might mean.

As this section develops, we will explore questions such as:

• What Is an Emerging Risk?

• What Are the Biggest Emerging Risks Right Now?

• What Is a Weak Signal?

• How Do You Spot a Risk Before Everyone Else?

• What Is Horizon Scanning?

• How Do Companies Identify Future Risks?

• What Trends Should Businesses Be Watching?

• How Do You Separate a Trend From Hype?

• What Is an Early-Warning Indicator?

• What Is Scenario Planning for Emerging Risks?

• How Do You Monitor Emerging Technology Risk?

• What Geopolitical Risks Should Businesses Watch?

• How Do Regulatory Changes Become Business Risks?

• What Climate Signals Should Businesses Watch?

• What Demographic Changes Matter to Business?

• What Is Technology Convergence?

• What Happens When Several Risks Occur at the Same Time?

• What Are Interconnected Risks?

• What Is a Polycrisis?

• How Do You Prepare for a Risk You Cannot Predict?

• How Do You Turn Weak Signals Into Action?

• What Should Be on a CEO's Risk Radar?

• What Should SMEs Be Watching Over the Next Five Years?

The purpose of Signals is therefore not to claim that we can predict what will happen next. Some signals will develop into something important, some will disappear, some will be misleading or false, and occasionally an event will still take us completely by surprise. What we can do is become more observant about the world around us, examine what we are seeing, distinguish evidence from noise and decide whether something should be watched, investigated or acted upon.

That is where Signals connects back to Risk Management: not knowing the future, but becoming better prepared to recognise when the circumstances around us may be changing.