Financial Institutions Make Progress Applying Smart Technologies for Risk Management, but Most Struggle to Keep Skills Develo...
September 20 2017 - 08:42AM
Business Wire
A new study by Accenture (NYSE:ACN) found that, while large
financial institutions have made progress applying smart
technologies like cloud, biometrics, and big data analytics to
their risk management functions, two-thirds (66 percent) of
executives say skills deficiencies are impeding the effectiveness
of the function as these technologies evolve.
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Risk Talent Redefined
The study, which is based on a survey of 475 risk management
executives in the banking, insurance and capital markets sectors
globally, also found that three-quarters of executives (73 percent)
cite an increase in the “velocity, variety and volume” of data as
impeding the effectiveness of their risk management functions.
According to the study, firms are struggling to develop the skills
necessary to make use of the larger information flows and take
advantage of related opportunities.
“As the nature of risk becomes more and more diverse and the
amount and quality of data explodes, the need for the skills to
bridge core risk management and new technologies is more urgent
than ever,” said Steven R. Culp, senior managing director of
Accenture’s Finance & Risk practice for Financial Services.
“Since the 2008 financial crisis, the world has changed
dramatically. Previously, financial institutions responded to
regulatory and control issues by adding talent. Now they must pivot
to increase the skills of their talent to keep pace with new
realities of data and technology. While technology cannot replace
experience and good risk management discipline, the risk teams that
will be most effective at integrating technologies like big data to
recognize patterns and test hypotheses will be the ones that are
best positioned to outperform their peers.”
According to the survey, 69 percent of executives believe that a
shortage of skills in new and emerging technologies is hurting the
risk function’s effectiveness. Only ten percent said their risk
teams have the internal resources needed to carry out the functions
they are asked to perform.
Skills shortages in risk management have been a persistent issue
for financial institutions since the 2008 financial crisis.
One-third (32 percent) of risk executives cited resources and
talent as a significant challenge in 2009 when Accenture first
began conducting the Risk Management Study. Two years later a
majority (53 percent) of executives were still reporting plans to
increase headcount. In 2015 only 41 percent of executives felt
their organizations had the digital technology skills needed for
risk management.
Staying in Front of the Next Wave of Risks
According to the 2017 study, risk functions are still in early
stages of adopting smart technologies. A minority of respondents
said they are “highly proficient” at incorporating these
technologies into the risk management function.
Looking outside the existing workforce to extend or enhance the
team is an increasingly common strategy for dealing with talent
shortages. About half of this year’s study respondents said they
expect to increase their use of outsourcing in areas such as
technology implementation, risk reporting and risk measure
calculation.
The report looked at risk management across three dimensions:
(1) integration — i.e., improving integration between the risk
function and the rest of the business; (2) technology — harnessing
smart technologies such as robotic process automation (RPA),
artificial intelligence (AI), big data and analytics, and machine
learning to improve risk outcomes; and (3) talent — obtaining a
broader base of risk capabilities that incorporates strong
functional experience with the skills needed to exploit new tools
and technologies.
The study also suggests that the integration of risk across the
organization is still somewhat limited. Less than one-quarter (24
percent) of respondents said their risk management activities are
coordinated across risk types; 19 percent said the activities are
coordinated across lines of business. Only 23 percent of
respondents said there is strong integration between the
integration of risk and finance.
“The risk management function has made great progress since we
conducted our first global study in 2009,” Culp said. “Smart
technologies such as robotic process automation and artificial
intelligence are gradually taking hold, and more respondents are
reporting the integration of risk analytics within planning and
decision-making. That said, staying ahead of the next wave of risks
— whether operational, financial or technological — requires a
continuous evolution of the risk function, and only companies that
put in place the right risk capabilities will be best positioned
for growth.”
About the Accenture 2017 Global Risk Study
The Accenture 2017 Global Risk Management Study is the fifth
edition of a study that was first conducted in 2009. It is based on
a computer-assisted telephone interviewing (CATI) survey of 475
senior risk management executives at banks, insurance companies and
capital markets firms globally conducted by Longitude Research on
behalf of Accenture in January and February 2017.
About Accenture
Accenture is a leading global professional services company,
providing a broad range of services and solutions in strategy,
consulting, digital, technology and operations. Combining unmatched
experience and specialized skills across more than 40 industries
and all business functions – underpinned by the world’s largest
delivery network – Accenture works at the intersection of business
and technology to help clients improve their performance and create
sustainable value for their stakeholders. With more than 411,000
people serving clients in more than 120 countries, Accenture drives
innovation to improve the way the world works and lives. Visit us
at www.accenture.com.
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AccentureJim O’Brien, 804-288-2902jim.obrien@accenture.com
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