Emerging technologies continue to rapidly change the way businesses operate and interact with customers, yet risk management processes are not keeping pace with the associated risks, according to a new report published by Marsh and RIMS, the risk management society.
The ‘Excellence in Risk Management XV: Maintaining Relevance in the Age of Innovation’ report delves into risk professionals’ knowledge of and role in managing technology innovation such as artificial intelligence (AI), blockchain, and the Internet of Things (IoT).
According to the findings, 59 percent of respondents said their organizations are currently using or exploring the use of IoT systems; 47 percent are using or exploring the use of AI; and 24 percent are using or exploring the use of blockchain. Despite the growth, only 14 percent said they strongly believe they have a clear process in place for addressing disruptive technology risks. Nearly half could not say there was a clear process at all.
The report found that most risk professionals would benefit from viewing digital technology from a balanced lens. When asked what it means for their organization to be ‘digital’, a majority cited operational improvements, such as automating core processes, more so than growth initiatives, including new ways of doing business and interacting with their customers.
By ignoring how digitization is changing the way companies interact with their customers, risk professionals cannot fully understand the changing risk profiles of their organizations, the report notes.
“Emerging technologies like AI, blockchain, and IoT are fast becoming the new normal, yet risk management is not keeping up,” said Brian Elowe, chief client officer, North America, Marsh. “Only by asking questions and understanding the underlying technologies and their uses throughout the organization can risk professionals truly appreciate their risks and respond accordingly.”
Carol Fox, vice president, strategic initiatives, RIMS, added: “Risk management professionals can add tremendous value and insight, supporting organizations’ 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 percent) and enhance data security (57 percent).
- Of the respondents whose organizations have cross-functional risk committees, 31 percent said disruptive technologies are discussed at every meeting.
- 40 percent 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.Read the report.