Risk managers overwhelmed by new technologies

The majority of risk managers worldwide cannot adequately assess the threats posed by new technologies, research by Accenture has found.

Risk managers overwhelmed by new technologies

After surveying nearly 700 risk managers in insurance, banking and capital markets, only 11% said they could determine all the risks posed by adopting artificial intelligence (AI).

Even fewer said they could fully assess the risks of robotic process automation and blockchain, with 72% warning that complex threats are emerging faster than their skills are advancing.

Disruptive technology, data breaches and operational risks were the top three challenges cited by the respondents.

“As the risk landscape continues to shift, risk managers aren’t able to evolve at the same pace as technology,” said Steve Culp, senior managing director at Accenture.

“Fortunately, risk managers acknowledge the need to adapt and embrace new tools and approaches, including advanced analytics and AI, even against a backdrop of mounting cost pressures.”

The survey also found that four in 10 respondents believe their risk function is, at best, only somewhat effective at responding rapidly to changes in the external risk environment.

However, the researchers also uncovered a strong correlation between companies adopting disruptive technologies and robustness within the risk function itself.

For example, 73% using machine learning over the last two years are satisfied with their progress preparing for volatile future scenarios, compared with 45% that don’t use machine learning or advanced analytics.

Despite this, only 40% of the respondents said that they apply advance analytics such as AI and predictive modelling to their datasets, with just 10% applying machine learning.

The top three obstacles to implementing advanced analytics cited were data residing in silos, lack of clarity around regulation, and integration challenges with legacy systems.

“By improving collaboration with other business functions and arming themselves with a broad range of data and analytics tools, risk functions can make considerable progress anticipating, assessing and mitigating new threats,” Culp said.

“Moving quickly will be critical, but so will taking a holistic view of the risk landscape, prioritising what they know, and preparing for what they don’t yet understand to help redefine the sphere of control.”

 

Image credit: ©iStock

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