I don’t suppose anyone thought 2025 was going to be quiet, but the speed of systemic change, uncertainty and risk has exploded. The truism of talking about VUCA now feels like quaint understatement as we grapple with dramatically different geopolitical realities and the disruptive impact of technological leaps.

It is therefore also time to double down on building the ability to anticipate and prepare for future risks. I think many organisations struggle because of a collective failure of imagination – the inability to imagine the nature and scope of potential threats, disruptions and opportunities before they hit. In practice, unexpected crises often expose gaps in risk management frameworks, and require a rethinking of the extent and nature of your enterprise risk management approach. A failure of imagination occurs when organisations do not consider unlikely or unprecedented risks. This was a key factor in events such as the 2008 financial crisis and the Covid-19 pandemic, where early warning signs or known risks were either ignored or underestimated.

This isn’t surprising, as traditional risk management approaches often focus on historical data and quantified risks, and risk management processes are often based on critical assessment and building a consensus view about what might happen and how organisations might respond. While this analytical approach works for stable, known risks, it can create a false sense of control over the unpredictable – leaving businesses unprepared for novel challenges.

We are familiar with the idea of innovation; after all innovation is a driving force in today’s economy, but it comes with inherent risks. Disruptive technologies, regulatory change and shifting consumer behaviours all introduce uncertainty. A robust enterprise risk management framework therefore balances fostering innovation with identifying and mitigating potential risks. But often this remains grounded in current debates, processes and objectives.

Key strategies to enhance risk management in an innovative environment include scenario planning, including of extreme but plausible events; cross-disciplinary collaboration so that risk management thinking is not siloed; encouraging a culture of open challenge so that people feel empowered to challenge assumptions and raise concerns about emerging risks; and, of course, leveraging data and AI to help detect weak signals of potential risks before they escalate. Firms that successfully integrate risk management into their innovation strategies use it as an enabler rather than a constraint, and are also often more resilient and adaptable in the face of disruption.

But we need to move even further, creating space for greater imaginative leaps into both threats and opportunities. How often do your risk management processes engage with the unthinkable, the impossible, the massively ambitious? Where do you ensure that the leaps of imagination required to anticipate and act on unknowable risks and opportunities happen? Risk leaders must actively cultivate these imaginative leaps to ensure their organisations thrive in uncertainty.

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