Accenture’s report is based on a survey of nearly 700 risk management executives in the banking, insurance and capital markets industries globally.
It was noted that the external risk environment is becoming increasingly complex, with risk management teams in Australia needing to adapt their approaches to deal with new threats and an accelerating pace of change.
Nearly half of Australian respondents (46 per cent) said the risk function is, at best, only somewhat effective in responding quickly to changes in the external risk environment.
Only 8% of Australian risk managers describe themselves as fully capable of assessing the risks associated with the adoption of artificial intelligence within their organization.
Fewer say they are fully capable of assessing the risks associated with robotic process automation (RPA) or blockchain (6% and 7%, respectively).
Tales Lopes, Accenture’s managing director of financial services in Australia and New Zealand, said risk and compliance functions are “undoubtedly under immense pressure” following the royal commission and now in the context of the COVID-19 crisis.
“COVID-19 shows us that comprehensive risk management is more urgent than ever, putting additional pressure on banks to have adequate capacity,” Lopes said.
“Data analysis also takes center stage, as most current regulations are data-driven. This means that financial institutions must prioritize risk data management systems, while ensuring quality, security and transparency, providing new reports for multiple purposes.
“Robust data analytics are more crucial than ever, particularly during a global pandemic of unprecedented proportions, enabling risk managers to generate risk insights and strategies during uncertain times. »
Additionally, risk management functions are grappling with the threat of cyber and financial crime, with concerns over customer data.
“We know that there has been an increase in the number of domains registered around the world to support a wide range of malicious activities, including credential harvesting, card fraud and malware installation ” said Mr. Lopes.
According to the study, the three main obstacles to implementing advanced analytics in the risk function are data residing in silos, lack of clarity around regulations and integration challenges with existing systems.
More than two-thirds of Australian risk managers (70 per cent) said they were improving their ability to collect data across the business, and 62 per cent said they were honing their ability to analyze it .
The survey found that 61 percent of respondents in Australia believe other functions recognize the important role risk plays in driving positive business outcomes and 80 percent said they have a close working relationship with the function financial.
Globally, 73 percent of respondents whose risk functions use machine learning were satisfied with the progress made over the past two years in preparing their business for volatile future scenarios, compared to just 45 percent of respondents surveyed worldwide whose functions do not use machine learning or advanced analytics.
While almost all risk functions have started using RPA to automate routine tasks, only 41% of respondents said they apply advanced analytics and predictive modeling to their data sets, and 3% apply learning automatic or AI.
According to the report, the lack of adoption is a missed opportunity for risk management functions, given the immense potential of these technologies to mitigate risk and improve performance.
“New and emerging technologies such as machine learning, advanced analytics and artificial intelligence are being deployed to help manage this data and mitigate these risks; However, the success of these technologies will require Australian compliance officers to upskill, build and articulate the desired outcomes,” Mr Lopes said.
“Automating certain compliance tasks can allow compliance professionals to focus on risk management and culture, ensuring that yesterday’s mistakes are not repeated.
“The stakes have never been higher, and ongoing remediation programs are a stark reminder of the consequences of poor compliance and risk oversight. »
