Skip to main content

Advertisement

SpringerLink
Log in

Contextualising risk within enterprise risk management through the application of systems thinking

  • Published:
Environment Systems and Decisions Aims and scope Submit manuscript

Abstract

New and emerging risks create growing uncertainty and unpredictability within enterprise risk management. While ISO 31000:2009 is a progressive risk management framework, it is limited in its guidance on how to contextualise complex risks. The application of systems thinking to risk management provides the opportunity to better understand complexity by viewing risk and the consequence of change as part of overall system behaviour. System modelling tools enable organisations to better contextualise their risk landscape. These tools assist organisations to identify vulnerabilities between social and ecological variables in the system within they exist. Determining drivers of change leading to system vulnerabilities can assist in understanding threshold limits of the system, thus enabling the organisation to build system resilience and organisational sustainability.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

References

  • Beasley MS, Clune R, Hermanson DR (2005) Enterprise risk management: an empirical analysis of factors associated with the extent of implementation. J Account Public Policy 24(2005):521–531

    Article  Google Scholar 

  • Beermann M (2011) Linking corporate climate adaptation strategies with resilience thinking. J Clean Prod 19:836–842

    Article  Google Scholar 

  • Berkes F, Folke C (1998) Linking social and ecological systems for resilience and sustainability. In: Berkes F, Folke C, Colding J (eds) Linking social and ecological systems: management practices and social mechanisms for building resilience. Cambridge University Press, Cambridge, pp 1–25

    Google Scholar 

  • Berkes F, Colding J, Folke C (2003) Introduction. In: Berkes F, Colding J, Folke C (eds) Navigating social-ecological systems. Building resilience for complexity and change. Cambridge University Press, Cambridge

    Google Scholar 

  • Bharathy GK, McShane MK (2014) Applying a systems model to enterprise risk management. EMJ 26(4):38–46

    Google Scholar 

  • Boatright JR (2011) Risk management and the responsible corporation: how sweeping the invisible hand? Bus Soc 116(1):145–170

    Article  Google Scholar 

  • Bromiley P, McShane M, Nair A, Rustambekov E (2014) Enterprise risk management: review, critique and research directions. Long Range Plan 48(4):264–276

    Google Scholar 

  • Collier WM, Jacobs KR, Saxena A, Baker-Gallegos J, Carroll M, Yohe GW (2009) Strengthening socio-ecological resilience through disaster risk reduction and climate change adaptation: identifying gaps in an uncertain world. Environ Hazards 8:171–186

    Article  Google Scholar 

  • Dawson TP, Rounsevell MDA, Kluvánková-Oravská T, Chobotová V, Stirling A (2010) Dynamic properties of complex adaptive ecosystems: implications for the sustainability of service provision. Biodivers Conserv 19:2843–2853

    Article  Google Scholar 

  • Eckles DL, Hoyt RE, Miller SM (2014) The impact of enterprise risk management on the marginal cost of reducing risk: evidence from the insurance industry. J Bank Financ 43:247–261

    Article  Google Scholar 

  • Folke C (2006) Resilience: the emergence of a perspective for social–ecological systems analyses. Global Environ Change 16(3):253–267

    Article  Google Scholar 

  • Ford A (1999) Modeling the environment: an introduction to system dynamics modeling of environmental systems. Island Press, Washington

    Google Scholar 

  • Forrester J (1987) Lessons from system dynamics modelling. Syst Dyn Rev 3(2):136–149

    Article  Google Scholar 

  • Hart SL (1995) A natural-resource-based view of the firm. Acad Manage Rev 20:986–1014

    Google Scholar 

  • Hart SL (1997) Beyond greening: strategies for a sustainable world. Harvard Bus Rev 75:67–76

    Google Scholar 

  • Hoyt RE, Liebenberg AP (2011) The value of enterprise risk management. J Risk Insur 78:795–822

    Article  Google Scholar 

  • IEC (International Electrotechnical Commission) (2009) IEC/ISO 31010: 2009 Risk Management- Risk Assessment Techniques. International Electrotechnical Commission, Geneva

    Google Scholar 

  • IRGC (International Risk Governance Council) (2010a) Emerging risks. Sources, drivers and governance issues. International Risk Governance Council (IRGC). Accessed 5 July 2012. http://www.futurict.eu/sites/default/files/Emerging%20risks%20-%20sources,%20drivers%20and%20governance%20issues.pdf

  • IRGC (International Risk Governance Council) (2010b) The emergence of risks: contributing factors. International Risk Governance Council (IRGC). Accessed 5 July 2012. http://www.futurict.eu/sites/default/files/The%20Emergence%20of%20Risks%20-%20Contributing%20Factors,%20International%20Risk%20Governance%20Council.pdf

  • ISO (International Organisation for Standards) (2009) ISO 31000:2009 risk management–principles and guidelines. International Organisation for Standardisation, Geneva

    Google Scholar 

  • KPMG (2011) Risk management: drivers of enterprise value in the emerging environment. Accessed 27 July 2012. http://www.kpmg.com

  • Lalonde C, Boiral O (2012) Managing risks through IOS 31000: a critical analysis. Risk Manag 14:272–300

    Article  Google Scholar 

  • Linnenluecke M, Griffiths A (2010) Beyond adaptation: resilience for business in light of climate change and weather extremes. Bus Soc 49(3):477–511

    Article  Google Scholar 

  • Linnenluecke MK, Stathakis A, Griffiths A (2011) Firm relocation as adaptive response to climate change and weather extremes. Global Environ Change 21(1):123–133

    Article  Google Scholar 

  • Linnenluecke MK, Griffiths A, Winn M (2012) Extreme weather events and the critical importance of anticipatory adaptation and organisational resilience in responding to impacts. Bus Strateg Environ 21(1):17–32

    Article  Google Scholar 

  • Nel J, Le Maitre D, Forsyth G, Theron A, Archibald S (2011) Understanding the implications of global change for the insurance industry: The Eden Case Study. Report No. CSIR/NRE/ECOS/2011/0063/B. Stellenbosch: CSIR

  • Nel JL, Le Maitre DC, Nel DC, Reyers B, Archibald S, van Wilgen BW, Forsyth GG, Theron AK, O’Farrell PJ, Kahinda JMM, Engelbrecht FA, Kapangaziwiri E, van Niekerk L, Barwell L (2014) Natural hazards in a changing world: a case for ecosystem-based management. PLoS ONE. doi:10.1371/journal.pone.0095942

    Google Scholar 

  • PwC (PricewaterhouseCoopers) (2009) Exploring emerging risks. PricewaterhouseCoopers. Accessed 15 June 2012. http://www.pwc.com/gx/en/research-publications/pdf/pwcglobalriskserm.pdf

  • Richardson GP, Pugh AL (1989) Introduction to system dynamics modeling. Pegasus Communications, Waltham

    Google Scholar 

  • Santam WWF, University of Cape Town, CSIR and UNEP Finance Initiative (2012) Insurance in a changing landscape. Local lessons from the Southern Cape of South Africa. Accessed 10 July 2012. http://www.unepfi.org/fileadmin/documents/insurance_changing_risk_landscape.pdf

  • Schaffernicht M (2010) Causal loop diagrams between structure and behaviour: a critical analysis of the relationship between polarity, behaviour and events. Syst Res Behav Sci 27:653–666

    Article  Google Scholar 

  • Schiller F, Prpich G (2014) Learning to organise risk management in organisations: what future for enterprise risk management? J Risk Res 17(8):999–1017

    Article  Google Scholar 

  • Sornette D (2009) Dragon kings, black swans and the prediction of crises. J Terraspace Sci Eng 2(1):1–18

    Google Scholar 

  • Sterman J (2000) Business dynamics: systems thinking and modeling for a complex world. McGraw-Hill, Boston

    Google Scholar 

  • Terzi C, Posta I (2010) Review of enterprise risk management in the United Nations system: benchmarking framework. United Nations Report, JIU/REP/2010/4: Geneva

  • van der Vegt GS, Essens P, Wahlström M, George G (2015) From the editors: managing risk and resilience. Acad Manage J 58(4):971–980

    Article  Google Scholar 

  • Vennix J (1996) Group model building: facilitating team learning using system dynamics. Wiley, New York

    Google Scholar 

  • Walker B, Salt D (2006) Resilience thinking: sustaining ecosystems and people in a changing world. Island Press, Washington

    Google Scholar 

  • Walker B, Carpenter S, Anderies J, Abel N, Cumming G, Janssen M, Lebel L, Norberg J, Peterson GD, Pritchard R (2002) Resilience management in social-ecological systems: a working hypothesis for a participatory approach. Conserv Ecol 6(1):14. http://www.consecol.org/vol6/iss1/art14

  • Walker BH, Holling CS, Carpenter SR, Kinzig A (2004) Resilience, adaptability and transformability in social-ecological systems. Ecol Soc 9(2):5. http://www.ecologyandsociety.org/vol9/iss2/art5/

  • WEF (World Economic Forum) (2010) Global risks 2011, 5th edn. World Economic Forum, Switzerland

    Google Scholar 

  • WEF (World Economic Forum) (2011) Global risks 2011, 6th edn. World Economic Forum, Switzerland

    Google Scholar 

  • WEF (World Economic Forum) (2013) Global risks 2013, 8th edn. World Economic Forum, Switzerland

    Google Scholar 

  • WEF (World Economic Forum) (2016) Global risks 2016, Eleventh edn. World Economic Forum, Switzerland

    Google Scholar 

  • Whitten SM, Hertzler G, Strunz S (2012) How real options and ecological resilience thinking can assist in environmental risk management. J Risk Res 15(3):331–346

    Article  Google Scholar 

  • Wolf R (2008) The evolution of enterprise risk management. The Actuary. June/July 2008: 19–22

  • WRI (World Resource Institute) (2008) The corporate ecosystem services review. Guidelines for identifying business risks and opportunities arising from ecosystem change. Version 1. Washington, DC: World Resource Institute

Download references

Author information

Authors and Affiliations

  1. Natural Resources and the Environment, Council of Scientific and Industrial Research (CSIR), PO Box 395, Pretoria, 0001, South Africa

    Lorren K. Haywood, Greg G. Forsyth, Willem J. de Lange & Douglas H. Trotter

Authors
  1. Lorren K. Haywood
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Greg G. Forsyth
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Willem J. de Lange
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Douglas H. Trotter
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Lorren K. Haywood.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Haywood, L.K., Forsyth, G.G., de Lange, W.J. et al. Contextualising risk within enterprise risk management through the application of systems thinking. Environ Syst Decis 37, 230–240 (2017). https://doi.org/10.1007/s10669-017-9627-8

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10669-017-9627-8

Keywords

Search

Navigation