Risk Management For The Digital Economy

13 Chief Risk Officers from the BFSI industry share their perspectives on shaping risk management for the digital economy:

- Ravi

The digital revolution is rapidly transforming the BFSI industry, right down to the core. Innovation and new technologies have created unprecedented changes in financial services and the way these services are delivered. Alongside, there is a massive increase in digital business volume across a wide variety of financial services. Is the immense transformation and scaling up putting new stresses on control frameworks? Are new risks coming in? Are some of the risks declining? We approached 50 BFSI organizations and are grateful to the 13 that responded enthusiastically.

The digital revolution now resembles a benevolent tsunami. It is unstoppable and it delivers improvement in speed, accuracy and service quality wherever it lands. Not all improvements, however, are risk-free. And that is the perspective that we are exploring, taking up issues such as new and rising risks, declining risks, leveraging tech-savvy youth, pilot projects, etc.

The digital transformations in risk can create real business value by improving efficiency and the quality of risk decisions. A digitized risk function also provides better monitoring and control and more effective regulatory compliance. Digital risk may appear to be a new terminology; but, it has been there for some time. It is just not one new type of risk, rather it’s an entire ecosystem. The term ‘Digital Risk Management’ encompasses all digital enablement that improves risk effectiveness and efficiency, and this includes process automation, decision automation, digitized monitoring and early warning. It includes work-flow automation, optical character recognition, advanced analytics, machine learning, artificial intelligence, new data sources and application of robotics to processes and interfaces, says a McKinsey report. It also includes people related aspects such as training, recruitment, promotions, compensation and culture as well.

PROMINENT NEW RISKS