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After the traumatic events of recent months, many businesses are improving their capabilities for identifying that next big emerging risk. But are CFOs looking in the right places?

John Farrell, advisory partner with KPMG in the U.S., said that finance executives should seek to better understand their own risk capabilities as the answer lies within their existing risk management frameworks and risk culture. "These should be redirected and refocused — as many businesses appear to be currently looking in the wrong places," he revealed.

Farrell stressed that the ability to spot how change has created a new risk should be the responsibility of all employees, not a select few in a risk function. "Every employee must be able to articulate what they see as a growing risk issue," he added.

Farrell went on to say that businesses should be asking whether they could do more in terms of training and awareness to improve their ability to spot new risks. "Those who believe that they can simply install a new product or solution and thus circumvent all these are deluding themselves," he said. He explained that the answer lies within a more self-aware risk culture with better trained employees able to get the right info to the right people in timely fashion.

CFOs are also advised to keep a much closer eye on the impact of events outside of their control. Farrell is increasingly seeing a greater focus on systemic risk--the risks posed to businesses by things like economic meltdown, spiraling unemployment, rapid inflation or deflation — perhaps even the effect of a global pandemic. He shared that scenario analysis will be a key tool in preparing for the fall-out of such risks, asking countless ‘what if’ questions and implementing contingency plans for the day that hypothesizing and speculating becomes reality.