The Leader Magazine

DEC 2017

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hacked and, on occasion, with catastrophic effect. So, the physical risk that is so often associated with property is morphing into another dimension of cyber risk. This is a dynamic risk that continuously evolves, cannot be seen, and is generally poorly understood within the sector. Whilst there is an acknowledgment of this risk, there is also a lack of momentum in tackling it, with many seemingly comfortable to wait for the effects to come knocking. The effects of climate change have become more pronounced within the past month and the start of the annual hurricane season. Weather disaster events within the U.S. have increased during January to July, to a cost of $16 billion and 57 lives. This is before you consider the most recent hurricanes of Harvey, Irma and Maria, and the wider devastation within the Caribbean. According to the National Oceanic and Atmospheric Administration, this cost increased $5.5 billion a year between 1980 and 2016. Last year, 2016, was the hottest year on record, and with this milestone has come a significant increase in droughts, wildfires, heat waves and flooding throughout the world. The requirement for CRE to adapt to these severe weather patterns is beginning to affect every stage of the property life cycle. The landscape has changed and the answers to problems are no longer within the purview of experienced, wiser and generally older leaders. Gone are the days of risks that can be mitigated through a linear response of yes or no. The oversimplification of risk solutions based on hindsight and th E l E a DER DECEMBER 2017 47 lessons learnt will no longer provide the answer. Risk, in short, is now too dynamic to simply implement a framework, a set of controls and layers of governance, although this will always be the starting point. It is this thinking that ushered in one of the most significant risks within the CRE sector, the feeling of uncertainty. We all feel this daily as we travel into our places of work catching up current affairs on one of our connected devices. The sphere of real estate is evolving and a binary view on the world is leaving us unprepared for an everchanging set of risks that no one has experienced before. The ability of the real estate leaders of today to think differently and treat a given problem as novel, meaning there is no known solution, can prove challenging for those who prefer a regular approach to a given risk. But understanding the concept of uncertainty and recognising the probabilities of the ever-evolving risk landscape will lead to the deployment of mitigation strategies that remain dynamic and fit for purpose. Sam Pickering is director and partner at Incendium Consulting Ltd., where he heads the firm's client focus on resilience.

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