Emerging technologies continue to change rapidly the way businesses operate and interact with customers, but risk management processes are not keeping pace with the associated risks from these disruptive technologies, said a recent report published by Marsh and RIMS, the risk management society.
The 15th Annual Excellence in Risk Management: Maintaining Relevance Amid Technology Disruption report is based on an annual survey looking at risk professionals’ knowledge of and role in managing technology innovation such as AI, blockchain, and the internet of things (IoT). According to the findings, 59% of respondents said their organisations are currently using or exploring the use of IoT systems; 47% are using or exploring the use of AI; and 24% are using or exploring the use of blockchain.
Despite the growth, only 14% said they strongly believed they have a clear process in place for addressing disruptive technology risks. Nearly half could not say there was a clear process at all. However, an overwhelming 89% acknowledged that risk management in their organisation has a role in supporting, promoting, or acting as a ‘needed brake’ on innovation. Only a few believed risk management has no effect (11%) or slows (1%) innovation, and none saw it as a barrier.
The report found that most risk professionals would benefit from viewing digital technology through a balanced lens, in terms of weighing both operational and growth objectives. Asked what it meant for their organisation to be ‘digital’, a majority cited operational improvements, such as the ability to deliver goods faster and automating core processes more than growth initiatives, such as new ways of doing business and changing ways of interacting with their customers.
By ignoring the growth initiatives, risk professionals cannot fully understand the changing risk profiles of their organisations, noted the report. Today’s companies must ask: What new markets are we looking to open? How are we positioning the company for growth?
“Emerging technologies like AI, blockchain, and IoT are fast becoming the new normal, yet risk management is not keeping up,” said Marsh North America chief client officer Brian Elowe. “Only by asking questions and understanding the underlying technologies and their uses throughout the organisation can risk professionals truly appreciate their risks and respond accordingly.”
RIMS vice president, strategic initiatives, Carol Fox said, “Risk management professionals can add tremendous value and insight, supporting organisations’ ability to make strategic decisions regarding disruptive technology. Engaging in innovation that impacts our companies, customers, industries, and even the practice of risk management itself is a giant first step. While risk professionals do not need to be ‘experts’ in the intricacies of these technologies, they can certainly advance the performance benefits that each new technology brings.”
Other highlights from the report include:
- The majority of respondents said they are most interested in technology that enables them to identify emerging risks (57%) and enhance data security (57%).
- Of the respondents whose organisations have cross-functional risk committees, 31% said disruptive technologies are discussed at every meeting.
- Forty per cent of respondents said they would consider switching insurers and other advisors based on their ability to provide innovations in the claims area.
The report is based on 450 responses to an online survey and a series of focus groups with leading risk executives in January and February 2018. A