Temporal hierarchy in enterprise risk identification

Abstract

PurposeThis paper aims to propose a risk identification method which is a synthesis of existing tools and techniques.Design/methodology/approachRisks are viewed as a temporal hierarchy of major decisions or events at the highest level, projects at the middle level, and routine operations at the lowest level. Furthermore, risks emerge as organizational activities progress over time. The organizational activities, called movements in this paper, typically follow the phases of routine (operations) > major decision/event > project > adjustment > routine which correspond to the chosen temporal hierarchy. Risks are identified by examining the movements in all applicable phases of their development. The method was applied in a case study of an enterprise in the energy sector.FindingsFocus on movements bridges company silos. Risk logs make sense only when supplied with visualization tools. The future state of the enterprise's routines should be modelled early in the decision‐making process. Attention should be paid to changes that major decisions, events, and projects impose on organizational routines.Originality/valueThe method belongs to the minority of approaches which explore risk evolution, relationships, and hierarchy rather than risk likelihood and impact. Risk evolution is explored by choosing movements as the basic units of risk identification. Risk relationships are detected on the level of routines where risk relationships are the least obvious but most important. The chosen hierarchy serves an enterprise‐deep view of risks and makes it possible to be alert for periods when the organization's risks change or new ones emerge.