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What Would Change if Risk Identification Was Treated as a Strategic Advantage?
- Julien Haye
- Jul 19
- 13 min read
Updated: Aug 2
Executive Summary
Most risk events that damage performance, reputation, or resilience were visible long before they materialised. The real challenge is not visibility, but identification and what leaders choose to do with what they see. This article reframes risk identification as a strategic capability that enables foresight, improves execution, and strengthens decision-making across complex environments.
Drawing on leading frameworks, cultural insights, and practical tools, it explores how organisations can move beyond compliance-driven registers to build a more inclusive, adaptive, and forward-looking approach. It examines the roots of blind spots, the importance of frontline insight, and the enabling role of leadership behaviour, governance, and emerging technology.
Whether you are leading transformation, building operational resilience, or rethinking enterprise risk management, this guide offers a structured, practical lens on how to identify the risks that matter before they become unmanageable.
TABLE OF CONTENTS
Introduction
Most risks that cause real damage are foreseeable. But they often remain unspoken, unseen, or ignored until it is too late. The post-mortems tend to reveal the same pattern: the signals were present, the concerns surfaced, but the organisation failed to identify or escalate them in time.
In her book The Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore, Michele Wucker describes gray rhinos as the highly probable, high-impact threats we often choose not to address. In our conversation on RiskMasters, she reinforced the idea that these risks are typically visible but uncomfortable, politically charged, or just low on the priority list until they become unmanageable. This is precisely where many organisations fall short: not in seeing nothing, but in acting on what is already known.
Listen to this RiskMasters Episode here: Gray Rhino on Risk Management and Decision-Making with Michele Wucker
This is why risk identification deserves far more attention than it typically receives. It is often treated as a routine process, a formality within the enterprise risk register. In practice, it is one of the most under-leveraged tools in proactive risk management. When done well, it changes how organisations think and act. It enables anticipation and preparation over reaction, alignment over fragmentation, and clarity over blind spots.
In leading organisations, risk identification is evolving into a strategic capability. It supports transformation, resilience, and confident navigation through uncertainty. It is a continuous process that informs how board directors and business leaders make risk-informed decisions, not only to prevent failure but also to flush opportunities and improve execution.
This article explores how organisations can strengthen risk identification by moving beyond compliance checklists to a more strategic, inclusive, and technology-enabled approach to foresight and decision-making.
Because today, the ability to see risk clearly and early is foundational.
What Is Risk Identification?
At its core, risk identification is about surfacing what could go wrong or right before it happens. It is the first and arguably most critical input into any risk management or strategic decision-making process.
It is the first step in the risk management process, preceding risk analysis and evaluation. While the risk assessment process focuses on understanding likelihood and impact, identification ensures the right risks are even considered.
Formally, the ISO 31000:2018 standard defines risk identification as “the process of finding, recognizing and describing risks” (Clause 6.3.1). This includes understanding the sources of risk, areas of impact, potential events and their causes, and potential consequences. It is a forward-looking activity that creates the foundation for risk analysis, evaluation, and treatment.
The COSO Enterprise Risk Management Framework (2017) adds that risk identification should be directly tied to strategy and performance, emphasising the need to identify “events that could affect the achievement of objectives — positively or negatively.” This is where many organisations fall short: they focus narrowly on operational or compliance risks and overlook strategic risks, transformation risks, or reputation-related blind spots.
Similarly, the UK HM Treasury’s Orange Book (2020) reinforces that effective risk identification requires a clear understanding of the organisation’s objectives and operating context. It describes the process as identifying “the events or circumstances that could pose threats or opportunities.”
Taken together, these frameworks converge on one idea: risk identification is about understanding your organisation faces and aligning your view of risk with your strategic intent.
It is also iterative and evolving. Risks change, contexts shift, and assumptions degrade. Which means that risk identification must be embedded into decision cycles, transformation programs, and operational reviews to maintain relevance.
At Aevitium, we define it this way:
Risk identification is the deliberate process of surfacing potential threats and opportunities that could affect an organisation’s objectives — informed by strategic context, grounded in diverse perspectives, and designed to evolve over time.
Beyond the Register: Risk Identification as a Strategic Input
The risk register has long been the centrepiece of risk management reporting. But in many organisations, it has become more of a catalogue than a strategic catalyst. Static, compliance-driven, and often disconnected from the pace of change, it reflects where risk has been rather than where it is going as aligned to risk appetite and risk tolerance levels.
That said, risk registers alone do not drive foresight. They rarely capture the complexity of strategic risk, the ambiguity of transformation risk, or the ripple effects of decision-making under uncertainty. These risks are deeply embedded in how organisations pursue growth, lead change, and manage disruption.
To stay relevant, risk identification must operate upstream. It should feed into strategic planning, transformation design, and innovation roadmaps. That means identifying risk is not simply about documenting known issues. It is about framing potential impacts before assumptions are locked in, before change plans are launched, and before risk becomes residue.
So, integrating risk identification into strategic planning ensures it is tied to your broader risk management strategy and embedded in day-to-day management practices.
This is also about being clear between what is risk and what is uncertainty. Risk can be anticipated, assessed, and managed within a structured framework.
Uncertainty requires a different posture: one that relies on adaptability, judgment, and leadership clarity. In Leading Through Uncertainty, I explore how leaders can create the conditions to navigate both effectively.
This shift also requires a stronger connection between the control environment and the broader decision architecture and governance. When risk identification is linked to how decisions are made and by whom, it becomes a source of clarity rather than friction. It helps leaders ask better questions and make choices that are not only defensible but forward-looking.
For organisations navigating complex change, risk identification must evolve from a passive inventory into an active input. A lens that sharpens strategic insight and reveals what might not yet be visible.
The Blind Spot Problem: Why Most Risks Get Missed
Organisations rarely miss risks because they are invisible. More often, they are visible to someone but not acted on. Credit Suisse suffered over $5bn losses with Archegos that could have been avoided if leadership had paid attention to the risk signals.
This is the reality of blind spots: risks that sit in plain sight but remain unacknowledged, undiscussed, or deprioritised until they become costly.
These blind spots emerge from a mix of structural and behavioural factors.
Siloed thinking prevents risk signals from moving across the organisation.
Cognitive bias leads teams to dismiss outliers or interpret data selectively.
Groupthink reinforces assumptions that go unchallenged. And in some cases, emerging concerns are recognised but avoided because surfacing them would be politically uncomfortable or personally risky.
This is where risk culture plays a critical role. If people do not feel psychologically safe to challenge plans, raise early concerns, or question dominant narratives, risk identification becomes a filtered process. It reflects what can be said, not necessarily what needs to be known. Over time, these gaps compound and what should have been identified as an emerging risk becomes a systemic risk.
The concept of gray rhinos speaks directly to this dynamic. These are the obvious, high-impact threats that are often recognised but still ignored – people can see the gray rhino charging but they don’t move... They are not hidden risks. They are visible, even discussed, but not prioritised. What makes them dangerous is not their unpredictability but our reluctance to act on them.
It is tempting to label these as "unknown unknowns," but that can let organisations off the hook. More often, these are unspoken knowns. Insights that existed but were not connected, surfaced, or given weight. Addressing this requires intentional leadership, cultural clarity, and mechanisms that reward transparency rather than punish dissent.
Uncovering blind spots is both technical and cultural work. It involves structured tools that surface weak signals and social dynamics that allow those signals to be heard. Without clear flows of relevant information, organisations often overlook specific risks that could have been addressed earlier.
The most effective organisations do not just identify risk through frameworks. They cultivate the conditions that allow risk to be seen and shared early.
Who Gets to Identify the Risk?
In many organisations, risk identification is still managed as a centralised, top-down process. Risk teams gather inputs from business units, validate against policy, and populate the register. But this approach can miss critical signals, especially those that appear first at the front line, in delivery teams, or through external partners.
The further removed a team is from day-to-day operations, the harder it becomes to see how risk shows up in practice. Early signs of process stress, control gaps, or third-party performance issues are rarely obvious from a distance. They are surfaced in the margins: during delivery reviews, system workarounds, or informal feedback loops. So frontline insights help teams identify potential control failures and surface weak signals that may never appear in traditional reporting.
This is why inclusive risk identification matters. When risk processes are open to frontline insight, they are more likely to detect shifts early. Practices such as risk and control self-assessments, team-led risk workshops, and open escalation channels bring risk closer to its source. They also help teams build confidence in raising issues without fear of blame.
Tools like key risk indicators (KRIs) can support this by linking early operational signals to broader risk themes. For example, spikes in processing errors or supplier delays might point to underlying third-party risk or resourcing stress that has not yet escalated. The key is to capture these signals in real time and create space for them to be explored rather than explained away.
Equally important is an accountability framework, such as The Three Lines Model, that supports shared ownership and segregation of duties. When risk identification is everyone's job, not just the remit of risk or audit, it becomes embedded in how teams think, plan, and execute. This mindset shift is essential for organisations navigating complexity. It ensures that risk insight flows from those closest to the work to those making strategic decisions.
Who gets to identify the risk? The answer should never be a single function. The most resilient organisations build systems where risk can be surfaced from anywhere and acted on quickly.
Risk Culture and Psychological Safety
Even the most well-designed risk frameworks will fail if people do not feel safe to speak up. The early signals of risk often come from discomfort, dissent, or challenge. These require psychological safety to be shared openly.
When teams fear judgment, blame, or career consequences, they hesitate. Concerns stay local. Warnings get softened. Leaders receive curated versions of reality. Over time, this erodes not only insight but also trust in the system itself. A lack of psychological safety delays action and increases exposure.
This is where risk culture meets leadership behaviour. The tone set by senior leaders in meetings, decisions, and reactions to bad news has a direct impact on the strength of the speak-up culture. If questioning assumptions or highlighting gaps is welcomed, early identification becomes part of how the organisation thinks and operates. If it is punished or dismissed, risk visibility disappears fast.
If you're curious how your leadership environment supports or constrains risk visibility, try the Leadership Behaviour Insight Assessment. It’s designed to help you reflect on the behaviours that shape risk culture and psychological safety in practice.
Supporting this cultural foundation is a clear escalation process. People need to know how to raise concerns, who will listen, and what response they can expect. Open forums, leadership walk arounds, regular listening sessions, and anonymous reporting options all send the message that raising concerns is not only permitted but valued.
Equally important is reinforcing risk ownership at every level. When individuals and teams understand the link between their work and the organisation’s broader risk context, they are more likely to contribute insight. Ownership drives engagement. Engagement drives foresight.
Ultimately, risk governance is not just about committees and controls. It is about building the conditions that allow risk intelligence to flow. That includes the structural enablers, but also the cultural ones that turn silence into signal.
The Risk Within provides a roadmap for embedding psychological safety into risk management. It identifies critical touch points across the risk lifecycle and offers clear actions to align leadership, culture, and governance. It is designed to help risk functions integrate more deeply into the business and strengthen decision-making at every level.
How to Identify Risk: Tools That Make the Invisible Visible
Identifying risk is about creating the conditions for better conversations. The right tools help structure those conversations, challenge assumptions, and reveal what may not be immediately obvious.
Tools like SWOT analysis, bow-tie analysis, risk heatmaps, and scenario analysis provide frameworks that guide both exploration and alignment. They make risk visible in a way that is clear, testable, and grounded in real-world context.
SWOT analysis helps teams evaluate their internal and external environment by examining strengths, weaknesses, opportunities, and threats. It provides a structured way to explore strategic context, uncover vulnerabilities, and identify areas of risk or advantage. When used in risk identification, it helps clarify where potential risks may arise and where existing capabilities can be leveraged to respond.
Bow-tie analysis helps teams examine how risk flows from cause to consequence, and where controls are positioned to intervene. It creates a shared picture of how risk events could unfold and what defences exist.
Risk heat-maps offer a visual summary of risk exposure. Their real value comes from the conversations that shape them — how likelihood and impact are assessed, what shifts risks into different zones, and how this aligns with decision priorities.
Scenario planning invites teams to explore plausible futures and test how strategy holds up under different risk conditions. This is especially useful in complex environments where linear thinking can fall short.
Horizon scanning expands awareness beyond internal operations to detect external changes, early signals, and emerging themes. It strengthens environmental context and supports forward-looking risk identification.
These tools are most effective when supported by a clear risk taxonomy: a shared language for what types of risks exist, how they relate, and how they evolve. Taxonomies help reduce ambiguity and ensure teams are talking about the same thing, even when the risks are complex or fast-moving.
What all these tools have in common is their ability to facilitate insight. They make space for cross-functional perspectives, challenge groupthink, and surface the risks that data alone may not reveal.
Risk identification is a human process supported by structured thinking. The right tools help teams see more clearly, think more critically, and communicate more effectively.
The Role of AI and Emerging Tech: Augmenting, Not Replacing, Human Judgment
Technology is changing how organisations detect, interpret, and act on risk. But despite the speed and scale that new tools offer, the goal is not to replace human judgment. It is to enhance it.
Modern data analytics tools can process far more information than any individual team, spotting weak signals and hidden patterns across large, complex data sets. Artificial intelligence (AI) adds another layer by learning from those patterns and flagging emerging risk exposures earlier than traditional methods.
Here are some of the most relevant use cases in risk identification:
Natural language processing (NLP): Scans unstructured data like incident reports, internal audit findings, call transcripts, and client complaints to surface recurring issues or hidden themes.
Machine learning (ML): Detects anomalies in operational data, such as sudden changes in transaction volumes, error rates, or behavioural patterns that may indicate a breakdown or risk event in progress.
Graph analytics: Maps complex interdependencies across systems, vendors, or projects, helping organisations understand how risk can propagate through networks that appear disconnected on the surface.
Large language models (LLMs): Summarise large volumes of control documentation, compare risk assessments across business units, and extract insights that support faster review cycles.
These technologies can reveal control gaps, surface early risk indicators, and reduce the time it takes to identify actionable insights. But they do not eliminate the need for sound judgment. Interpreting signals, applying context, and making ethical decisions all remain fundamentally human responsibilities.
This is where governance becomes essential. Organisations must be clear about how AI is used, how its outputs are validated, and who is accountable for interpreting the results. Without proper oversight, the illusion of precision can become more dangerous than uncertainty.
Cultural readiness also matters. If teams do not trust the outputs or do not feel empowered to challenge them, the benefits will never be realised. The best use of technology in risk is not about automation. It is about augmentation, giving teams better tools to see more clearly and respond more confidently.
Conclusion: Build a Learning, Listening, and Adaptive Risk Function
Risk identification is not a static task. It is a capability that can be built and strengthened over time. With the right tools, an open culture, and a shared understanding of context, organisations can identify potential issues early, group them logically, and assess the risks before they escalate.
In modern risk management, the focus is shifting from compliance to contribution. From listing risks to learning from them. The organisations that succeed are those that treat risk identification as part of a wider system of continuous improvement, where insight flows both ways and signals are actively sought, not passively received.
This requires more than process. It requires leadership that listens, systems that learn, and behaviours that reflect a shared commitment to resilience. Risk identification becomes part of how strategy is tested, how performance is challenged, and how operational resilience is built.
To move forward, start by asking:
Who defines the risks?
What signals are we missing?
What feedback loops are in place to learn from what we do see?
The most effective risk functions are not just well-governed. They are adaptive, listening across the organisation, learning from experience, and building the confidence to act before risk becomes impact.
What would change in your organisation if risk identification was treated not as a checkpoint, but as a strategic advantage?
About the Author: Julien Haye
Managing Director of Aevitium LTD and former Chief Risk Officer with over 26 years of experience in global financial services and non-profit organisations. Known for his pragmatic, people-first approach, Julien specialises in transforming risk and compliance into strategic enablers. He is the author of The Risk Within: Cultivating Psychological Safety for Strategic Decision-Making and hosts the RiskMasters podcast, where he shares insights from risk leaders and change makers.
