Edinburgh Napier University

  IT innovations have reshaped banking and will continue to do so. They are a manifestation of indispensable progress, yet risks emerge from IT innovations.
Historic data and accounts of emerging risk experiences are rather scarce. Hence, they present a special challenge to risk management as they are hard to identify.
Moreover, traditional risk management practices, relying on historic data, may not be fully adequate.
What solutions can be offered by risk management to manage these risks? When is an uncertainty understood as an emerging risk? Who needs to be involved in the risk management process?
The research asks the seemingly obvious question, yet this important topic has been regularly neglected in academics as well as in practice. Both literature and theoretical basis have only recently developed so as of yet there is little availability of varying viewpoints and reliable theories. 70% of the banks interviewed do not actively consider emerging risks in their risk management process. The banks take a reluctant position in general, waiting to see how things develop. Only three banks have a proactive approach and manage emerging risks from IT innovation in using
an enterprise-wide approach such as Enterprise Risk Management (ERM).
Therefore, this work develops a conceptual framework which aims to fill the research gap between ERM as an approach to holistic portfolio risk management and the lack of academic and practical work on emerging risks. The conceptual framework explores how banks can apply ERM to manage emerging risks in the future.
Researching this topical phenomenon, extending today's common application and understanding of emerging risks and ERM in practice and academia is one of the most challenging tasks confronting future risk management (Bromiley et al., 2015).
To the author’s knowledge, this project is one of the first to take this challenge.