Beyond the rear-view mirror: A practical framework for horizon scanning in financial risk management

Abstract

This paper presents a practical framework for business environment analysis and horizon scanning specifically tailored to the operational requirements of risk management and strategy departments within financial institutions. While it briefly acknowledges that traditional models based on historical data encounter limitations when facing structural change, the primary objective is to provide a structured three-phase process based on established foresight methodologies. To facilitate immediate use by risk practitioners who may not have extensive prior experience in foresight science, the paper introduces a clear ontology of future phenomena which avoids excessive theoretical complexity while ensuring conceptual precision. In this context, the paper delineates the vital distinction between horizon scanning and traditional materiality assessments, identifying the former as a critical upstream input that informs the latter by challenging existing system boundaries. Special emphasis is placed on the methodological foundations of the assessment phase, where structured elicitation protocols are utilised when expert judgement is needed. These protocols are designed to minimise cognitive biases and ensure that expert opinions are statistically reliable. The paper concludes by illustrating the operational integration of qualitative foresight intelligence into established banking procedures, including monitoring, stress testing, and strategic planning. In doing so, horizon scanning moves beyond a mere compliance activity, positioning it as a valuable tool for enhancing long-term strategic resilience and risk management practice. The paper also provides illustrative examples that help to turn horizon scanning into a practical tool, advancing it beyond compliance to support strategic resilience and risk management. This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.