MISSING ASPECTS OF THE RISK: SPEED AND DURATION

Abstract

Purpose- Risk assessment, risk prioritization and risk responding are vital steps in any risk management process. After risks are identified, traditional approach allows risk experts to define likelihood and impact factors for these risks. Thus, a risk severity can be defined, and risk prioritization can be considered under the budget constraints, i.e., cost of implementing remedial measures. On the other hand, recent events, like digitalization and pandemic, showed that evaluating only these two factors of the risk can be missing. Two important aspects of the risk are suggested to be considered: speed (velocity) and duration. In this study, these two elements are analyzed. Methodology- In the study, following an introduction, COSO models and results of the literature review are analyzed. After a theoretical background and a literature review, a discussion on new aspects of the risk is started. Finally, an imaginary case is used to analyze risks including all aspects. Findings- It is realized that in the academic literature, new aspects of the risk have not been addressed yet. This is the reason why these two aspects defined as missing. At the end, it is concluded that although speed and duration are elements, which directly affect the impact factors, at the same time, these are key determinants of the timing and structure of the risk responses. Additionally, continuous risk assessment can be beneficial for the entities to have more time to respond to the risks. Conclusion- Depending on the findings, it is concluded that all aspects of the risk is needed to be analyzed during risk management processes. The originality of this study stems from the fact that it includes practical suggestions for integrating the concepts of speed and velocity, which are conceptually included into the frameworks. In addition, this study presents a perspective by associating the concepts of agility, resilience, and continuous risk assessment.

Keywords

• Risk assessment
• COSO
• risk management
• internal control
• internal audit

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