This year, risk management will look inward.

Automation is not new to risk management, but businesses will increasingly look to the technology to address pandemic-spurred risk and security issues, said J.H. Caldwell, a global financial services risk advisory leader and a partner at “Big Four” accounting agency Deloitte. Caldwell recently authored the organization’s “Global Risk Management Survey,” which included findings on how automation technologies, such as artificial intelligence and robotic process automation, will fit into that landscape. The study also examines trends for risk management in the next two years.

“What risk management has spent a lot of time on in the last few years has been the line of business, not their own function,” Caldwell told Bank Automation News. “So there’s a lot of untapped or un-leveraged opportunity that sits there in the [risk] unit itself.”

COVID accelerates automation

The pandemic accelerated the need to automate risk. It turns out, employees and schoolchildren haven’t been the only ones at home figuring out how to work; hackers have put the time to use by increasing their attacks. Before the pandemic, attacks were up 50% over 2018 levels; by the midpoint of the year, when COVID-19 was in full swing, attacks were up 400% year over year, Caldwell said. As a result, organizations spent part of 2020 just trying to manage what was coming at them.

Now, businesses are fortifying their strategies for risk and security. This means advancing the technologies needed to stay ahead, Caldwell said. As conditions change, risk models tend to become stale and frequent updates are necessary. In fact, Caldwell compares them to cars, which start to depreciate as soon as they are driven off the lot. Artificial intelligence can negate this depreciation by leveraging real-time data to update the models, keeping them relevant.

Risk management will also look to technology to address growing cost pressures. “I think you’re going to see automation and machine learning and other things all across the function,” Caldwell said.

Ripe for upgrade

Testing is another area of risk management eligible for an AI upgrade. Caldwell predicts more focus on automating testing of operational risk or compliance risk; this would mean running a script to ensure compliance against data. For example, a financial institution might automate a check of recordings for certain words to ensure call center discussions remain compliant with regulations. Operational risk testing, compliance risk testing and other forms of testing could also be automated, he said, allowing automation to play a horizontal role across all relevant areas.

For instance, risk management could benefit from automating the cataloging of rules and regulations, essentially leveraging AI to seek out updates and import them into tools automatically. A risk manager can then focus on mapping the new rules and regulations to the process and determine the implications and decision points to test.

“I don’t really think that tomorrow morning, we’re going to wake up and find an artificial intelligence tool that’s been designed that will do that analysis for us,” Caldwell said. “The things that we have done today or yesterday that are repeatable, that can easily be made autonomous, that the thinking patterns and the decision patterns have similarity to them — those are things that I think you’re going to see people automate.”

Bank Automation Ignite, taking place April 13-14, 2021 as a virtual experience, is the event for inspiring automation initiatives and investment in financial services. Formerly the Bank Innovation Ignite conference, this new focus creates an event where financial services professionals can discover new use cases and technologies that are accelerating automation in banking. Learn more and register for the event at www.BankAutomationIgnite.com.