How does data analytics work as a well-planned response against novel risk?

We can't envision a business where any form of risk isn't involved. The same goes with preparedness; no matter how good risk management systems are in enterprises, there is always some novel risk that can dismantle certain activities for quite a time when it arrives.?

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Sometimes, businesses are familiar with certain kinds of risk. For those risks, a company's risk management develops specific protocols, brings forth some processes to foresee the risk, assesses the seriousness of that risk, and finds ways of mitigating them. These methods will work only when the risk is familiar, but in a new situation where the risk is novel, following through a playbook doesn't work.?

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Companies tend not to invest in preparing for distant and novel risks. And 2020 is a supreme example of why companies must prepare for novel risks when the pandemic hits worldwide. These unfamiliar risks can result in major catastrophes, which can become a hurdle in business for quite a long time.??

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However, today's emerging analytics technologies help businesses foresee some of these risks much earlier and help detect dangers or obstacles that might be on the way. Therefore, the use of analytics and business intelligence tools are becoming evident in our business world today.??

Now, it is essential to understand what exactly makes a risk novel and what conditions can trigger such risky events;?

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• The embedded risk isn't visible; It could be that some events happen so far away that the likelihood of its impact on business seems meagre. Or it could be that the risk gets embedded in the organizational data or structure but still needs to come on top in visible form to be noticed. Analytics helps in refining data to bring that novel or embedded risks to appear in full-fledged visual form. A novel threat emerges when we overlook something outside our imagination or experience; therefore identifying these risks is of prime importance.??

• Multiple breakdowns combine to create a significant failure;?it sounds obvious that novel risk gets found in anomalies, the things that don't make sense. For example, During the construction of the 787 Dreamliner airplane, the company Boeing decided to introduce new structural changes; they chose to use composites instead of aluminum to make the plane lighter. The company handed over the responsibility of engineering, designing, and integrating the assemblies to an amateur. In addition, Boeing decided to replace hydraulic controls with electronic controls, which required using lithium batteries for backup. All these complexities when combined created the perfect storm of failure, which was inevitable. The lithium batteries caught fire when the plane launched, and all aircraft got shut down for several months.???

• Out of controlled responses, when the risk spreads at a gigantic level;?Enterprises often see investing in novel risk as uneconomical, especially when it happens far away. But sometimes, overlooking those aspects can cause significant damage to the business when no planned response works to mitigate the response to such events. The world is familiar with bacterial and virus infections and epidemics, and many vaccines developed after that. But when the coronavirus pandemic hit, its spread response was much more significant in magnitude that it failed the best healthcare systems.??

Conclusion??

No matter how robust company's risk management is, it still needs to be stronger against novel risk. Novel risks are overwhelming. Their response can deconstruct and cause damage from unforeseen places. These unknown risks can emerge out of the anomalies or can be hidden or be too far away to be noticed. Therefore, data analytics plays a crucial role in preparing companies for unplanned responses, since no fixed playbook can save the business when novel risk strikes.??

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Modern technological tools in analytics and business intelligence are grabbing the need to capture novel risks the moment it arises. The Data dashboard displays hidden anomalies in visual form to make it comprehensible at one glance.???