Emerging risk is not risk in the usual sense, and that matters for how we should discuss, evaluate and respond to it
It is common to use the word “risk” in the definition of emerging risk. That seems potentially circular to me, and wrong.
Take for example this definition of emerging risks from Swiss Re: “We define emerging risks as newly developing or changing risks which are difficult to quantify and which may have a major impact on an organization.” http://bit.ly/1IaV3aw
Why is this use of "risk" in the definition of "emerging risk" OK? Perhaps “emerging” is an adjective describing a type of risk. If so, then a definition of emerging risk that includes “risk” in its own definition is not self-referential. But does this interpretation make sense?
If emerging risks are a type of risk, then they represent a special case, just like a “green door” is a special case of a “door” and influenza-caused illness is a special case of “illness”. Everything that we know about interacting with green doors or influenza is a subset of everything we know about interacting with doors or illnesses. In the sense of “emerging” as a category of risks, such risks are special cases of risk, but they are not special.
But what if “emerging risk” is special, i.e., a thing different from “risk?” If it is special, then managing emerging risk requires something that is not part of our understanding of how to manage risk. I think emerging risks are special.
The validity of a claim to specialness in this case depends on the agreed definition of “risk.” Suppose “risk” is understood in Knightian terms, i.e., “a measurable uncertainty” (Risk, Uncertainty, and Profit, Frank Knight, 1921, p. 19).
Then if an essential characteristic of “emerging risk” is that neither the severity nor the probability of an emerging risk can be readily estimated, it follows that "emerging risk" is not a type of risk. It lies outside the scope of the Knightian definition.
It is worth repeating, that in a Knightian view emerging risk is not risk. Knight would have concluded instead that emerging risk is a type of uncertainty.
Why care about whether “emerging risk” is risk? One reason I care is that I want to engage people in productive conversations about emerging risks, and the people who I want to engage must adopt different evaluation and decision criteria for emerging risk discussions than for discussions about Knightian risks, because the risk management toolbox we commonly employ is for Knightian risks, and that is of no help here.
The word “risk” triggers a particular framework in the thinking of people with whom we are communicating. This framework includes expectations about the nature of the conversations that will take place, the kind of evidence that will be brought to bear on those conversations, and a particular way of processing that evidence for decision making.
Successful engagement in a dialogue about emerging risk will be complicated by using a term like “risk” if that word creates an unreceptive mindset for the kind fuzzy data that is inherent in and unique to the emerging risk discussion.
Emerging risk is not risk in the usual sense and that needs to be made clear as a first step to managing emerging risk.