Emerging risks are triggered by unanticipated changes in the business environment and include potentially disruptive events of varying velocity, ranging from catastrophic events to realization of existing risks accelerated by external and/or internal factors over a longer period. They also may arise from dramatic shifts in the marketplace.

Emerging risks are important to boards that place high value on early warning, and occasionally looking around the corner keeps the risk dialogue with management evergreen. This article summarizes practical principles for recognizing emerging risks and the importance of directors setting expectations of management to inform the board’s risk oversight process of these risks on a timely basis.