Preparing for Frontier Risks in the New Economy

Leaders in the public and private sectors manage a multitude of risks. Among these are high-likelihood, high-impact threats that don’t come out of the blue but instead follow a series of indications and evidence that such an event was on the horizon, such as the 2008 financial crisis (these have been called “grey rhinos” because of their scale and probability). At the other end of the predictability spectrum are so-called “black swan” risks, which are characterized by their extreme rarity, severe impact and improbability, such as the use of civilian aircraft in the 9/11 terrorist attacks. Recognizing that attention and resources are focused on managing immediate crises, this chapter spotlights a unique kind of risk alongside the predicted and the almost-impossible-to-predict: “frontier risks” – risks that emerge at a frontier as technologies surface or human and societal forces shift. These risks are characterized by their unknown likelihood, unknown impacts or both.