AI, Gen AI Most Popular Technologies For Managing Rising Risk: KPMG Report
AI and gen AI are also the most commonly identified solutions that the risk function is planning to invest in over the next three to five years.
Risk management is becoming more complex and challenging given the pace of escalation of risk transformation, according to KPMG International’s new Future of Risk report. Around 61% of executives surveyed expected to see a significant increase in the level of risk they will be responsible for in the next three to five years.
At the same time, technological advances are accelerating, enabling risk professionals to manage change better, while at the same time bringing fresh risks. The study found that artificial intelligence and generative AI are the most popular types of technology for managing additional risk responsibilities.
AI and gen AI are also the most commonly identified solutions that the risk function is planning to invest in over the next three to five years. According to the survey, the technology is allowing practitioners to enhance their ability to filter through data, spot trends and suggest solutions.
Adapting To Risk Transformation
The survey found that 90% of respondents believe that the pace of risk management transformation, fuelled by technological disruptors, has increased, with 56% indicating that it has risen sharply.
Risk management professionals’ number one focus in the next one to three years is to adapt to new risk types such as AI; geopolitical; reputation; environmental, social and governance ; IT and cyber risk. The second-biggest priority is to leverage advanced analytics and AI for risk management. Around 41% of executives expect to spend more than half of their risk management budget on technology in the next 12 months, compared with just 28% in the previous year.
Need For System, Domain And Processes Integration
Around 68% of survey respondents believe that integration and interconnection of risk management systems, domains and processes had a significant positive impact on the effectiveness of risk-related decision-making. However, only 46% of respondents rate the level of collaboration between risk domains as adequate.
A majority of CEOs and chief operating officers (66%) and chief risk officers and risk managers (57%) believe that cross-functional task forces, collaboration and communication are essential for better understanding the likelihood and impact of large-scale events and developing greater resilience and agility.
“This report makes clear the need for organisations to fundamentally alter their approach to risk by embracing risk as an enabler and an asset that drives stakeholder value. As our survey shows, executives are already aware of the scale of transformation required and are taking steps to address this,” said Nancy Chase, global risk leader at KPMG International. “However, external challenges and the scale of transformation to come requires businesses to embrace a future where these risks are understood and harnessed.”
