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FutureRiskMinds

Two key themes integral to the future risk landscape

Posted by on 16 November 2017
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Future risk

We welcome another up-and-coming risk manager to present their vision of the future of risk management, with our FutureRiskMinds series. Sunkanmi Ogunneye, Strategic Risk at RBS tells us how the industry is evolving. 

The pace of innovation and disruption in the financial services industry is creating new opportunities for organisations. With new opportunities come new risks, both foreseen and unforeseen, and this inevitably alters the nature of risk management as we traditionally know it.

Risk management is evolving in response and is headed to a future where, by embracing technology, automation and analytics, it will enhance organisational strategy and operational effectiveness. I believe two key themes will be integral to the future risk management landscape:

1) Greater level of insight and wider risk coverage and;

2) Proactive risk management creating proactive relationships with customers

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Greater level of insight and wider risk coverage

In the future, risk management will be interdisciplinary, with wider risk coverage. The progress being made in data insights and AI & automation will create and enhance a wide range of customer-centric solutions, such as answering queries; managing finances and predicting customer behaviour. Risk management will also benefit from development in these spaces. Progress in data & analytics will lead to more detailed insights and therefore more successful business decisions. Efficiency and accuracy in risk processes will improve once AI and automation is embedded into the risk management framework of financial services integration.

As data insights and AI & automation become the “normal” way of working, risk will have to expand operations into spaces such as behavioural science, social media, biometrics and quantum computing. This will require a more varied pool of talent in the risk management area, and will inevitably impact the role profile of the Chief Risk Officer (CRO) of the future. Today, organisations largely employ those with traditional financial services backgrounds for the CRO role. The CRO of the future, depending on the risk management landscape, could come from a big tech, social media or behavioural science background. Failing this, risk management functions may require the creation of a CRO equivalent role which addresses non-traditional risks that become inherent risks in the way financial services organisations operate.

Proactive risk management creating proactive relationships with customers

Future risk management will not be seen as an impediment to achieving strategic goals, but an enabler to achieve these goals by strengthening customer relationships and ensuring the best possible customer outcomes. Risk will be proactive with data, detecting when key changes are occurring in a customer’s life. This will enable the proactive identification of customer needs, without the customer having to inform their bank, and thus build a stronger and more nuanced customer relationship. This is in great contrast to risk management of today, which tends to be reactive or retrospective when addressing the issue of customer needs and whether they are being met.

There are numerous ways in which future risk management will fundamentally differ from the function as it is today. With the volume and diversity of innovation occurring today, it is inevitable that risk management will also have to change in how operates, and will in turn add more value to businesses.

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