Summarising various definitions, “Risk Management is a systematic process of identifying, assessing, and mitigating threats or uncertainties that can affect organisations”. To achieve this, organisations establish a Risk Management Function or Unit[1]. From small and non-complex financial institutions to the largest ones (Global Systemic Institutions), people are appointed to carry out risk policies and procedures efficiently and effectively under this definition. However, there is a big difference nowadays from the previous periods, and this is the huge technological leap in the post-COVID-19 era.
Remote Working, Data Centers and Big Data Analytics, A.I. driven decision tools and much more are here to help Risk Managers redesign processes and reform their functions. But how is this possible?
Over time, a major problem in hiring RMU’s employees was finding and eventually relocating and compensating highly skilled personnel. Remote Working, today, gives flexibility to fill out easily missing risk teams' competencies. Moreover, it helps maintain or even improve work-life balance, enhancing the effectiveness overall. There is a need to find new ways to develop team bonding and strengthen employees’ collaboration, which is quite challenging.
Today’s technological breakthroughs have been transforming risk management practices by enabling the collection, storage, analysis, and usage of large volumes of data. New models can be developed more robustly and accurately than before, even ones that replicate human behaviour and habits. Also, AI-driven decision tools set up the conditions for fully automated processes, with their outcome 24/7 available to management and customers. In controversy, building large Data centres demands more energy, which brings forth climate-related challenges. In addition, new data and model governance issues have emerged. Back-testing and validation procedures need to be in place, and all of these must be well managed in the end.
“Elderly risk personnel, after evaluation, should be used in coaching, mentoring or training at job programs where their ability to interpret the actual meaning of figures and values produced by automated or semi-automated processes is invaluable”
These changes bring forth many questions. Some of them I would like to share with you. What will be the optimum composition of a Risk Team in the future to come? What are the “must have skills’ and “nice to have” skills for a new risk manager? How do you keep the cost efficiency mixture under control? Finally, how do we deal with elderly risk personnel which are not capable of retraining or adapting the change?
As far as I can foresee (but not an oracle), the new age risk teams, to be more effective and add true value to their organisation, should consist of a mixture of Financial, IT or even ESG skills empowered by continuous education in soft skills as well. To succeed in this, besides seminars or other executive education, universities will play a crucial role by revising their basic curriculum programs and embracing the changes. Elderly risk personnel, after evaluation, should be used in coaching, mentoring or training at job programs where their ability to interpret the actual meaning of figures and values produced by automated or semi-automated processes is invaluable.
To summarise, these changes are not without cost in terms of both money and time. The maximum use of technology with insufficient technologically trained personnel can lead to unnecessary expenditures. Especially in small organisations it can also prove disastrous. All changes must be planned with a future horizon considering the existing status and how it can adopt the change. We are entering a new exciting era where we must rethink not only our role as Risk Managers but as humans being part of our organisations.
