Integrating risk professionals in emerging technology and digital transformation projects improves user experience, increases digital trust and confidence in project delivery and reduces execution costs, according to an EY poll.
The poll – held during a recent webcast entitled “How can you turn digital risk into a source of competitive advantage?” – revealed that 59% of participants said increased digital trust and increased confidence in delivery resulted from the integration of risk professionals in digital transformation projects. However, 57% say that the involvement of risk professionals in their transformation initiatives is either limited or missing.
EY global advisory risk leader Amy Brachio said that traditionally, risk has been seen by organizations as something that needs to be mitigated, managed or ideally eliminated altogether.
“But risk management is not just about diminishing the downsides of doing business, it is also about maximizing the upside ways that support the organization to achieve its goals,” she said. “The risk function cannot afford to operate in a silo. Not only does it need to actively engage with functions, including internal audit, IT and legal, but also with front line business leaders and external parties.”
Brachio explains that an area of prime importance for businesses in an era of disruption and easily available information is maintaining trust and credibility, which can affect reputational risk of the business. “Today’s’ risk professionals must develop new ways to find a balance between managing risk and moving fast enough to enable enterprises to intercept opportunities and reap the rewards.”
Industry convergence and new business models are emerging with the rapid technology advancements, according to the poll. All poll respondents had ongoing projects involving new or emerging technologies in the areas of digital (53%), cloud (54%), automation (40%) and advanced analytics (37%). However, respondents said the participation of risk professionals within these projects were either none (12%), limited or partially integrated (40%), or fully integrated (12%).
Disruptions needed to deliver strategic value
According to the poll, a fundamental shift in mindset will be needed by organizations to evolve from the current way that they are managing risk and compliance, to a digitally enabled function that delivers strategic value.
The majority of respondents (65%) agreed on the need for disruption in the risk and governance function to drive strategic value. Thirty-one percent voted for integration of all risk functions into one approach (such as internal audit, enterprise risk, legal, compliance, health and safety). Twenty-one percent said that implementing new and emerging risk technologies such as robotic process automation, artificial intelligence and advanced analytics would be key to disrupt the risk function. A data-driven approach to risk monitoring would drive disruption, according to 21.5% of respondents, while another 17.5% said specialized resources and training was required to support a more technical and data-driven risk program.
“In this age of disruption, risk professionals need to disrupt themselves. Since organizations will only be able to pursue radical growth and value creation if they embrace risk and uncertainty, they need risk to evolve from being primarily a defensive function into a driver of strategic development,” Brachio says. “Risk professionals need to take advantage of new data, new technologies, new skillsets, new structures and new ecosystems to provide robust, respected and trustworthy analysis. Risk tools, such as risk intelligence, risk models, simulation functionality, and visualization platforms, can all help boards to foresee the consequences of their decisions, facilitating better decision making, quicker innovation and greater speed to market.”