A Risk skier W World? I ? Its He s Here A Global R Risk sks s - - PowerPoint PPT Presentation

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A Risk skier W World? I ? Its He s Here A Global R Risk sks s - - PowerPoint PPT Presentation

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Global Risk Institute A Risk skier W World? I ? Its He s Here A Global R Risk sks s and T nd Tren ends F Framework May 10, 2017 Lois Tullo Executive in Residence Stephen Hart Previous CRO BNS Global Risks and Trends Framework

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Global Risk Institute

A Risk skier W World? I ? It’s He s Here

A Global R Risk sks s and T nd Tren ends F Framework May 10, 2017

Lois Tullo Executive in Residence Stephen Hart Previous CRO BNS

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Global Risks and Trends Framework (GRAFT)

What is it?

  • A systematic process and tools to evaluate the synergistic impact of Global Risks

and Trends.

  • A method that:
  • Compares the assumptions supporting your strategic plan with the correlations of

prioritized Global Risks and Trends to identify Key Insights for the organization;

  • Promotes a shared understanding of the implications of Global Risks and Trends on

your organization’s strategic plan; and

  • Enables directors to make more informed decisions.
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Organizational Vision & Strategy Risk Appetite Statement Examples of Key Insights

  • Increased National Sentiment, State Conflict, and Weapons of Mass Destruction resulting in increasing strain on trade talks,

potential disruption to supply chains, and reduced M&A and IPO volumes.

  • Climate Change, Increasing Extreme Weather Events, and Water Crisis causing roaming black and brown outs, resulting in

factory slow and shutdowns. Global Risks & Trends

Geopolitical Economic Societal Environmental Technological

Key Strategies & Strategic Assumptions

T r e n d s R is k s

Urgency Impact

GRAFT

Overview of Global Risks and Trends Framework

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1.Articulate Key Strategies

  • 2. Identify

Strategic Assumptions

  • 3. Review &

Understand Global Risks and Trends

  • 4. Rank

and Prioritize Global Risks and Trends

  • 5. Map

Global Risks and Trends on to GRAFT

  • 6. Identify

Correlations, Scenarios and Key Insights

  • 7. Challenge

Ranking

  • 8. Compare Key

Insights to Strategies

  • 9. Adjust the

Organizational Strategies

How to Apply the Global Risks and Trends Framework

Organizational Vision & Strategy Risk Appetite Statement

Key Strategies & Strategic Assumptions

Global Risks and Trends Economic, Environmental, Geopolitical, Societal Technological

R A N K

Global Risks & Trends

Geopolitical Economic Societal Environmental Technological Key Insights Challenge Rankings Organizational Strategy

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Step 1 & 2 Articulate Key Strategies and Assumptions

Step 1: An effective strategy should already have outlined: Step 2: What GRAFT adds:

1 What is the vision for the

  • rganization, why and where

is the organization is going? What are the underlying Geopolitical, Environmental, Economic, Societal, and Technological assumptions that the organization has made in establishing its vision? 2 How will the vision be accomplished? What is the Strategic Plan of the Organization? What are the Geopolitical, Environmental, Economic, Societal, and Technological assumptions about your team, systems and processes that need to be in place to accomplish your strategy? 3 Are the underlying skills and tools in place to accomplish the tasks at hand? What are the Societal and Technological skill based assumptions that have been made?

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Bank of Nova Scotia – 2016 - Total assets: $896.5 billion CAD

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Step 2 Identify Strategic Assumptions - Examples

  • 1. Current Demographic trends in the population
  • 2. Level of Chronic Disease
  • 3. History and prediction of infectious diseases
  • 4. Maintain credit rating
  • 5. Degree of Peace in the countries which they operate, Terrorism levels
  • 6. Degree of Social Stability in the countries which they operate
  • 7. History and Predicted extreme weather event losses in the countries which they operate
  • 8. Degree of stability of the Government in the countries in which they operate (longevity, privatization, corruption, debt)
  • 9. Degree of the effect of Rule of Law in the countries in which they operate

10.Degree of Stability of the Regulatory Environment in the countries which they operate 11.Degree of Reliable of the infrastructure (Power, telecommunications, water, etc.) in the countries which they operate 12.Degree of Stability in the computer systems 13.Degree of Freedom of movement of and security of information in the countries which they operate 14.Degree of freedom of movement of individuals in the countries in which they operate 15.Degree of Stability and liquidity in FX markets in the countries which they operate 16.Stability and liquidity in Equity markets in the countries which they operate 17.Stability and liquidity in bond markets in the countries which they operate 18.Moderately rising interest rates in the countries which they operate 19.Access to skilled workforce in the countries which they operate 20.Law abiding workforce in the countries which they operate

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Step 3 Collective Understanding of Global Risks & Trends

Geopolitical

Risks

  • 1. Terrorist Attacks
  • 2. Interstate Conflict
  • 3. Failure of national governance
  • 4. Weapons of Mass Destruction
  • 5. State Collapse or Crisis
  • 6. Failure of Regional or Global

Governance

Fragile State Map 2016

Trends

  • 1. Increasing National

Sentiments

  • 2. Changing Landscape of

International Governance Geopolitical Concerns

  • 1. Syrian War
  • 2. Russia and Crimea
  • 3. China and the South Sea
  • 4. Brexit
  • 5. US uncertainty
  • 6. North Korea missile firing in Japan Sea

Political Uncertainty

  • 1. Turkey’s vote
  • 2. France’s election
  • 3. Germany’s election
  • 4. China’s election
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Step 3 Collective Understanding of Global Risks & Trends

Societal

Trends 1. Increasing polarization of societies 2. Aging Population 3. Rising Urbanization 4. Rising Geographic Mobility 5. Rising Chronic Diseases Risks

  • 1. Large-scale involuntary

migration

  • 2. Water Crisis
  • 3. Food Crisis
  • 4. Profound Social Instability
  • 5. Spread of Infectious

Diseases

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Step 3 Collective Understanding of Global Risks & Trends

Economic

Risks

  • 1. Unemployment and

Underemployment

  • 2. Fiscal Crisis/Sovereign

Debt

  • 3. Asset Bubble
  • 4. Failure of Financial

Mechanism or Institution

  • 5. Illicit Trade
  • 6. Energy/Commodity

Price Shock

  • 7. Deflation and Inflation

Trends

  • 1. Rising Income and Wealth

Disparity

  • 2. Growing Middle Class in

Emerging Economies

World Unemployment

Percentile Unemployment by Country

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Step 3 Collective Understanding of Global Risks & Trends

Technological

Risk

  • 1. Cyberattacks
  • 2. Data Fraud or Theft
  • 3. Failure of Critical Infrastructure/Information

Infrastructure Breakdown

  • 4. Adverse Effects of Technical Advances

DDOF Peak size and frequency of Attacks have increased dramatically in 2016

https://pages.arbornetworks.com/rs/082-KNA-087/images/12th_Worldwide_Infrastructure_Security_Report.pdf

Trend

  • 1. The Rise of Cyber Dependency

Seven Hours of Screen Use on Average Daily

100 200 300 400 500

Daily Screen Use Minutes Smart Phone TV Laptop Tablet

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Step 3 Collective Understanding of Global Risks & Trends

Environmental

Trends 1. Climate Change 2. Environmental Degradation Risks

  • 1. Extreme Weather Events
  • 2. Natural Disasters
  • 3. Failure of Climate-Change

Mitigation and Adaption

  • 4. Man-Made Environmental

Disaster

  • 5. Biodiversity Loss and

Ecosystem Collapse

Climate Change Effect

Flooding In China CO2 levels dangerously high

https://www.ipcc.ch/ipccreports/tar/wg1/088.htm

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Step 4 & 5 - Rank, Prioritize & Map Global Risk and Trends

Urgency

Immediate 30 years 3 – 5 years

Impact

High High Low Low

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Step 6 – Identify Correlations GRAFT Correlation Matrix Tool

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Step 6 - Example Correlation, Scenario and Key Insights

Correlation Geopolitical Economic Societal Environmental Technological

Failure of National Governance

Rising Cyber Dependency

Data Fraud/Theft

Terrorist Attacks Failure of Critical Information Infrastructure

Cyber Attacks

Fiscal Crisis / Sovereign Debt Inflation / Deflations

Aging Population / Young Population Increasing National Sentiment

Rising Income & Wealth Disparity Increasing Polarization of Society

Climate Change (Regulation)

Extreme Weather Events Natural Disasters

Unemployment / Underemployment

Failure of Regional or Global Governance

Involuntary Migration

Growing Middle Class in Emerging Economies

Asset Bubble Illicit Trade

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Step 8 & 9 - Apply Key Insights

Organizational Vision & Strategy Risk Appetite Statement Examples of Key Insights

  • Increased National Sentiment, State Conflict, and Weapons of Mass Destruction resulting in increasing strain on trade talks,

potential disruption to supply chains, and reduced M&A and IPO volumes.

  • Climate Change, Increasing Extreme Weather Events, and Water Crisis causing roaming black and brown outs, resulting in

factory slow and shutdowns. Global Risks & Trends

Geopolitical Economic Societal Environmental Technological

Key Strategies & Strategic Assumptions

T r e n d s R is k s

Urgency Impact

GRAFT