This was part of the findings of a recent report released by the global professional services firm Accenture, which surveyed 475 risk management execs in the banking, insurance and capital markets.
Two-thirds (66 per cent) of respondents said a lack of the right capabilities is a barrier to adopting technologies that can deliver greater accuracy and control, increased agility, and improved risk analysis and insight.
The survey also found that three-quarters (73 per cent) of respondents view the increase in the “velocity, variety and volume” of data as impeding the effectiveness of their risk management functions. Firms are struggling to develop the skills necessary to make use of the larger information flows and take advantage of related opportunities, according to Accenture.
“As the nature of risk becomes more and more diverse and the amount and quality of data explode the need for the skills to bridge core risk management and new technologies are more urgent than ever,” said Steven R. Culp, senior managing director of Accenture’s finance and risk practice for financial services.
The world has changed dramatically since the 2008 financial crisis, he said.
“Previously, financial institutions responded to regulatory and control issues by adding talent,” noted Culp. “Now they must pivot to increase the skills of their talent to keep pace with new realities of data and technology.”
The survey 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 program 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.
Here are other key findings of the Accenture survey:
- Only 10 per cent of respondents say their risk teams have the internal resources to carry out the functions they are asked to perform
- Less than one-quarter (24 per cent) of respondents said their risk management activities are coordinated across risk types
- 19 per cent said the activities are coordinated across lines of business
- Only 23 per cent of respondents said there is strong integration between the integration of risk and finance
Skills shortages in risk management have actually been a persistent issue for financial institutions since the 2008 financial crisis, according to Accenture. One-third (32 per cent) 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 per cent) of executives were still reporting plans to increase headcount. In 2015 only 41 per cent of executives felt their organizations had the digital technology skills needed for risk management.
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.
Accenture also found that companies are increasingly looking outside of their organization in order to deal with the risk management skills shortfall. . 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.
Still, Culp believes that the risk management function has made some notable strides since Accenture’s initial survey in 2009.
“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,” he commented. “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.”
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