S5E6: Build An Emerging Risk Reflex Before The Next Shock Hits
The conversation centers on a stubborn truth: most boards are well briefed on emerging risks, yet few translate insight into movement. The research shows 76 percent receive comprehensive risk reports, 42 percent engage meaningfully, and just 22 percent act. That collapse at the decision point is the “funnel of inaction.” The hosts argue that leaders chase the wrong fix by investing in problem precision using hyper-detailed probabilities and impact ranges. This approach only provides a marginal, statistically insignificant uplift in action. Precision invites skepticism, shifts attention to model assumptions, and implies costly, multi-year programs that boards rationally defer. The better path is to reframe conversations around solution options that emphasize low regret actions, the cost of delay, adjustments to existing programs, and clear pacing across quarters.
Source: wheelhouseadvisors.com
The shift from observation to action depends on building an “emerging risk reflex” using the IRM Navigator™ Model, which balances investment across four domains: GRC, ERM, ORM, and TRM. Today most enterprises are GRC-heavy, optimized for visibility and auditability but weak at strategic framing, operational sensing, and technical response. That imbalance creates the reporting plateau: everything is cataloged and scored, but little changes. ERM links risks to objectives and value drivers, turning an eight-out-of-ten score into a projected margin hit that demands a decision. ORM translates strategy into frontline signals by aggregating KRIs, near misses, and loss events that expose stress as it happens. TRM connects controls to real telemetry, enabling continuous monitoring and quick technical adjustments. Together, these domains convert signals into paced choices.
A practical illustration makes the shift clear. A problem-precision packet on looming AI regulation might present Monte Carlo charts, speculative fines, and a vague “monitor closely” conclusion that triggers deferral. A solution-options packet proposes low-cost training for cross-functional leads, quantifies the opportunity loss of waiting, tweaks the scope of an existing third-party program to add AI clauses, and sequences work across quarters. Boards respond to options, trade-offs, and pacing. This approach reframes risk as a performance tool, not just a compliance burden, and uses existing budgets to avoid new funding battles. Critically, it sets decision velocity as a success metric: how fast a threat becomes a board-approved course correction.
The model aligns capabilities to four outcomes, PRAC: performance, resilience, assurance, and compliance. Performance is powered by ERM and ORM, connecting strategy to operational signals so leaders can prioritize high-impact moves. Resilience emerges from ORM plus TRM, fusing process adaptation with digital observability and enabling rapid containment when third-party incidents or system failures occur. Assurance requires ERM to steer audit focus and GRC to document and remediate, but it cannot lead action on its own; if it dominates, it validates processes that fail against novel threats. Compliance blends GRC policies with TRM enforcement, keeping the business legal but not necessarily competitive. The message is blunt: you need all four, in balance, to act at speed when the stakes rise.
The forecast warns that many firms will remain stuck in the 22 percent band through 2027, doubling down on visibility while reflex capacity stalls. Early movers will shift spend toward ERM and ORM to spark performance, then harden TRM to scale resilience, measuring progress by decisions taken, not slides produced. For risk leaders, the immediate steps are clear: audit investment asymmetry against the IRM maturity curve, kill problem-precision packets in favor of solution options, wire ORM and TRM into analysis to ground proposals in telemetry, and track meaningful actions as the primary KPI. Vendors and advisors must pivot too, moving from dashboards to decision workflows that shorten the path from signal to action. The payoff is structural: when risk arrives, leaders see choices, not fear; they progress through paced steps, not paralysis; and the reflex fires when it matters.
Podcast Episode Chapters
1:10 - The 22% Problem Emerges
3:35 - Visibility Versus Action Gap
5:33 - The Failed Fix Of Problem Precision
9:10 - Solution Options Beat Better Charts
14:08 - Low Regret Actions And Pacing
17:55 - Introducing The IRM Navigator Model
20:57 - Four Domains And Maturity Stages
24:38 - GRC Strengths And The Reporting Plateau
28:49 - Why Emerging Risks Break GRC
32:40 - Linking Risk To Strategy With ERM
35:39 - ORM Signals And Real-Time KRIs
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