Market Insight: The Convergence Of Physical And Digital Risk Management

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Executive Summary

Firms are faced with a difficult, continual challenge: how to mitigate business risk to ensure business continuity. Business risks arising from both physical and digital sources are increasing in frequency, severity and complexity. Concurrently, physical and digital risks are becoming increasingly connected, exposing businesses that have failed to consider how risks may interlink and impact diverse business functions. Risk management strategies must evolve to counter this evolving threat, and protect operations, assets and employees. This report examines how digital and physical risks are interlinked; how they may propagate one another, to create ‘cascading risks’; and which technologies executives should consider leveraging to maintain business integrity.

Table of contents

Physical And Digital Risks: Rethinking Outdated Risk Silos 
Both Physical And Digital Risks Are Growing Independently
Physical And Digital Risks Combine In the Modern Risk Landscape

Risk Management Strategies Must Evolve To Counter Cascading Risks 
Traditional Risk Management Through The Lens Of EHS
Three Actions to Build Resilience  Against Intertwined Physical And Digital Risks

Table of figures

Figure 1. Interlinked And Cascading Risks Case Studies 
Figure 2. Physical Risks From Digital Critical Events 
Figure 3. Factors influencing Risk Severity 

About the authors

Connor Taylor

Connor is a Technology Analyst in the ESG & Sustainability practice. His current research agenda focuses on emerging software solutions across financial markets, and broader market trends in the ESG space. Connor joined Verdantix in 2021 and has experience in EHS technology sales and development. He holds a B.A from Cambridge University in Anglo-Saxon, Norse and Celtic.

Rodolphe d’Arjuzon

Global Head of Research and Finance Director

Rodolphe co-founded Verdantix in 2008 and directs the firm’s research strategy across all practice areas. He also leads the Environment, Health & Safety practice on an interim basis. Rodolphe has over twenty years of experience in technology research and strategy consulting. He previously worked for Barclays Bank and L.E.K. Consulting. Rodolphe holds a PhD in Physics from Cambridge University.

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