The impact of artificial intelligence on risk management

Artificial intelligence (AI) is becoming more and more prevalent in our lives, so it's never been more important for risk experts and other business professionals to understand and embrace it.

There’s no doubt that AI will continue to change the way we live and work, and create a range of new risks that organisations will need to manage.

The world, as well as risk experts are trying to understand how AI can best serve organisations, and the outcomes we can expect from this evolving technology. 

Embracing AI

It’s imperative that all business professionals, not just those in risk management, thoroughly understand the opportunities and risks involved with AI. Although the technology is unpredictable which can feel daunting, it should be embraced and utilised rather than feared.

This doesn’t mean the journey will be plain sailing. Because AI is evolving so rapidly, there will inevitably be a learning curve associated with using it correctly which will be challenging to stay on top of. But we must all make time to learn and understand what AI can do, what its limitations are and how we can develop and take it to the next stage.

Why is AI relevant to risk professionals?

Risk professionals need to develop a thorough understanding of AI-related risks and recognise how it will impact their organisation in terms of leadership, innovation, and security. 

The management of AI risks could well make the difference between business success and business failure.

The critical thing is that concerns, particularly those around employees are managed, mitigated, or alleviated where possible.

How will AI be beneficial for risk management?

There are a range of benefits that AI will bring for risk professionals. The key benefits are that:

• it speeds up and enhances decision making;
• it can handle vast amounts of data efficiently and with less human intervention;
• it can reduce cost; 
• it creates new opportunities for innovation; and
• it will create employment opportunities within the risk sector, based on understanding AI systems.  

What will be the main issues? 

AI has huge strengths and can profoundly impact decisions, but risk professionals must guard against the possibility of it shaping an organisation in ways that are both distorted and unhealthy. For example, AI tools are known to ‘hallucinate’, which means they can generate a response which contains false or misleading information. Therefore, it may be wise to double check the information they provide.

Issues around data privacy are also likely to become prominent, so risk management around cyber security should also be considered.

How is BW integrating AI into risk management?

We believe the optimisation of interaction between humans and AI will lead to success for risk management professionals.

As part of our real time decision analytics offering, we offer the BW Swarm AI interactive platform which assists in evaluating the risk and opportunities. It does this by providing a crowdsourcing platform so expert views can be collated and combined to surface information and detail, which would be difficult to draw out using conventional methods. 

The platform is of use in both the public and private sectors, and can help clients make decisions in areas such as horizon scanning, strategy development and risk appetite development, along with prioritisations, forecasts, and assessments.

Keith Smith, Senior Risk Consultant says: “Our Swarm tool is a great example of artificial intelligence combining with techniques that have traditionally been difficult to manage, such as crowdfunding. The world runs because people make decisions and implement them, so better decisions lead to better outcomes, that's how it works.”

“Humans make decisions differently to AI, so it’s important to keep their input in the process. You then have the benefits of moral judgement when harnessing the power of AI, which brings the power of looking for patterns and trying to associate the data in real time. In many ways, it’s a match made in heaven.”

Find out more 

If you would like to discuss the topic of AI and risk management in more detail, please visit our risk advisory and analytics page for more information and insight. You can also unlock access to over 1,000 hours of risk management content by signing up to the BW Risk Portal.