Globalization has prompted a shift in organizations’
concerns about risks from local to global. Researches
(WBSCD, 2004) are starting to identify it as a mega risk,
encompassing all risks the organization can face in the 21st
century. Mega risks are often unprecedented in their potential
scale and cost. Therefore a systemic approach should
be taken for addressing these risks, as they cannot be tackled
in isolation from each other. Taking a wider approach,
mega risks, whether traditional or emerging, are large-scale
risks or mega-trends that can impact societies, human
health, the environmental and the business sector, etc. The
sources of theses risks may be natural events, social and
technological developments, or political actions. Political
upheavals, cross-border litigation, environmental pressures
are just some of the mega risks that face the corporate sector.
Dealing with them requires far-sightedness and innovation.
While many risks have local origins, their impact
may rapidly become global. Mega risks are generally too
large and too complex to be managed or mitigated by any
single stakeholder.
The risk is magnified by the global communications
and IT, which help to balance power between people,
corporations and nations by enabling businesses, governments
and society to scrutinize each other and share
information. Corporate reputations may be destroyed in a
matter of days, especially in a new knowledge based
economy, when organizations depend on intangible rather
than physical assets.