The future of risk management in Financial Services

Six imperatives that should be considered

The future of the risk function
Business units will have clear ownership for the risks that they take. Conduct and culture management will be pervasive throughout the organization. The role of the risk management function will also be clear — oversight and challenge. The risk function itself will be streamlined and much slimmer with a rationalized risk infrastructure that uses location and delivery models for cost optimization and leverages the power of digital for both efficiency and effectiveness.

The digital tools will include cognitive agents scanning a wide range of signals in the internal and external environment to identify new risks, emerging threats, and potential bad actors. These digital tools will not only strengthen the risk function but provide additional insight to the business and to strategy and strategic execution. Big data analytics will be used to provide deeper insight into the interactions of risks and causal factors. Robotics and process optimization will restructure processes and automate many of the processes that remain to dramatically reduce both operational risk and also improve quality of risk management — including reviewing conduct and culture risks.

Automated risk triage will occur continuously to elevate risks to risk analysts for further assessment and treatment where warranted of the more significant risk issues. To the extent that reports are needed to summarize the risk activity, natural language generation techniques will prepare draft reports, with only review and selected input performed by the risk analyst. This paper from Deloitte Global describes the challenges facing financial institutions and the approaches they can use to move to this new future of risk management.

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