Financial firms are struggling to assess risks posed by emerging technologies, says a report from information technology services and consulting major Accenture.
According to the $43 billion IT company, risk managers at the financial firms believe that adopting artificial intelligence (AI), blockchain and robotic process automation (RPA) could have unintended consequences, with 72% of them saying that complex risks are emerging more rapidly than ever before.
Financial companies are willing to adopt new strategies and tools as close to 90% risk managers felt that they were not fully capable of assessing the risks posed by these technologies. These findings were part of the report, 'Global Risk Management Study' based on a survey of nearly 700 risk management executives in the banking, insurance and capital markets sectors from across the world.
With the external risk environment becoming increasingly complex, risk teams at these firms are realising that they must adapt their approaches to contend with new threats and the heightened pace of change, the report noted.
“As the risk landscape continues to shift and evolve, protecting against data breaches and managing new, interconnected threats — risk managers aren’t able to evolve at the same pace as technology,” said Steve Culp, a senior managing director at Accenture who leads the company’s finance and risk practice.
For instance, nearly three-fourths (72%) of respondents said that complex, interconnected new risks are emerging more rapidly than ever before. Meanwhile, only 42% said that the risk function is somewhat effective at responding rapidly to changes in the external risk environment.
"Risk managers need to include broader sources of data, advanced analytics and AI, even against a backdrop of mounting cost pressures,” Culp said, pointing out that the survey revealed a strong correlation between the deployment of these technologies and robust risk-readiness.
Accenture said that among those who deploy machine learning (ML) for risk functions, 73% were satisfied with their progress, compared with only 45% of respondents whose functions don’t use ML or advanced analytics. The report added that the lack of adoption is a missed opportunity for risk functions, given these technologies’ immense potential to mitigate risk.
However, data challenges are impeding the adoption of advanced analytics. Data sets reside in silos and companies struggle with a lack of clarity around regulation, as well as challenges in integrating with legacy systems. Nearly two-thirds (63%) of those surveyed said that they are improving their ability to collect enterprise-wide data, and 66% said they are honing their ability to analyse it.