Dynamic Risk Assessment (DRA)
Identifying, connecting and visualizing
risk in four dimensions
2021
Dynamic Risk Assessment (DRA) is a proprietary fit for the future as the forces and trends that shape our
methodology developed by KPMG to help bring a better future have increasingly not manifested themselves before.
understanding of the risks organizations face in today’s Moreover, risks combine. They spill over into each other—they
complex world of developing technology, emerging don’t manifest neatly in isolation—and we no longer have the
markets, climate change, growing populations and other luxury of dealing with risks discretely.
mega trends that interact to shape our future. DRA takes
an unprecedented approach to gaining insights into There is a need to advance beyond historical risk analyses
clients’ risk environments by pinpointing central risks and comprising two-dimensional depictions of expected
shedding new light on the risk mitigation strategies. probability and severity, and consider a third, and indeed a
fourth dimension: velocity and contagion. This, together with
In today’s highly interconnected and volatile world, dominated the consideration of global trends that are shaping our world,
by new technology and emerging business models, the past is what Dynamic Risk Assessment encompasses.
is no longer a reliable guide to the future. Past data is a poor
DRA vs. Traditional Risk Assessment
Traditional, two dimensional risk map Inter-connected view
High The individually most
significant risk exhibits low
Likelihood and severity
levels of expected contagion
of this cluster exceeds
those of this single risk
Potential impact
This individually insignificant
risk has hidden systemic
significance: It triggers many
other risks into existence, all of
Connectivity strength:
Likelihood
them more significant than itself
low
Low Likelihood of occurrence High medium
high Severity
Certain risks connect more to each other than all other risks in the network, forming clusters.
DRA applies graph theory, the science of expert elicitation, risk and non-risk frontline and back-office individuals within
actuarial modeling, sophisticated mathematics and financial the business. This is done in a KPMG proprietary (and patent
mathematical algorithms, advanced data & analytics (D&A) pending) methodology to identify, connect and visualize risk
and accounting science to assessments from experienced in four dimensions.
The DRA methodology combines qualitative and quantitative data to help identify:
Your greatest systemic How risks will impact A framework to revisit
risk exposures, each other in the network your risk tolerance and
combinations and risk and how they behave in overall risk management
clusters to inform a risk a dynamic manner over strategy
mitigation plan time
Insights that may help you improve
mitigation of systemically critical
The impact of “mega risks, to aid you in developing an
trends” and their effects investment strategy to counter
on your business those weaknesses
The DRA process
Typically, the end-to-end DRA process takes six to eight weeks, with the key steps outlined below:
KPMG Deliver
Landscape Follow Up
DRA Survey KPMG Analysis Dynamic Risk
articulation Workshop
Assessment Report
1 2 3 4 5
KPMG works with Key stakeholders KPMG applies KPMG discuss the The DRA report is
key stakeholders complete an online advanced network findings with the discussed with the
to identify the key survey, for the theory to the key stakeholders. client to form part
risks facing the collection of data on survey responses of strategic planning
organization. the characteristics to identify the and ongoing
of the risks facing organization’s monitoring.
the organization. interconnected risks
and opportunity
The survey requires
network, and it’s
approx. 45 min to
dynamics.
complete.
Joey Gyengo
Contact us Principal, Consulting
ERM Solution Leader
T: 404-520-5327
E: jgyengo@kpmg.com
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