The majority of UK financial firms do not believe they can adequately assess the risks of disruptive technologies, as technology advancements move faster than the skills of their risk managers, according to a new report by Accenture.

Financial firms invest in disruptive technologies such as artificial intelligence (AI), blockchain and robotic process automation (RPA) to better assess and prevent increasingly complex risks. Yet only 5% of UK financial services firms describe themselves as fully capable of assessing the risks associated with adopting AI across their organisations, compared to a global average of 11%. British firms are only marginally more confident when it comes to assessing risks associated with blockchain (11%) or RPA (8%).

The findings are based on the “Accenture 2019 Global Risk Management Study,” a survey of nearly 700 risk management executives in the banking, insurance and capital markets sectors globally.

The external risk environment is becoming increasingly complex, with two-thirds of UK respondents acknowledging that new risks are emerging more rapidly than ever before. At the same time, over half (55%) said the risk function is only somewhat effective at responding to the changing risk environment.

“Disruptive technologies are changing the way banks manage threats to their business,” said Peter Beardshaw, UK & Ireland Head of Finance & Risk at Accenture. “When firms apply technologies, such as artificial intelligence, they can make decisions more rapidly and with a context humans cannot compete with. Risk managers have a huge job on their hands to put the right controls around this technology to help prevent future conduct risks, and demonstrate best practices for managing the data feeding algorithms responsibly.”

Percentages of risk managers who are ‘fully capable’ of assessing the risks associated with their organization’s
adoption of each of the following technologies.

Risk associated with integrating technologies in an organisation has also risen up the ranks in the past two years. Globally, 58% of those surveyed said that disruptive technology risk has a greater impact on their business today than it did two years ago.

However, the financial firms that have invested in new technologies are more risk-ready and robust. Three-quarters (73%) of respondents globally who use machine learning are satisfied with their progress in preparing their business for risk in the last two years, compared with less than half (45%) of respondents whose functions do not use machine learning or advanced analytics.

Data challenges impede the adoption of advanced analytics

The report reveals that risk functions’ difficulty to make better use of these technologies is compounded by data challenges, such as siloed data, regulation and integration challenges with legacy systems. Encouragingly, nearly two-thirds of UK respondents (60%) said they are improving their ability to collect enterprise-wide data and 56% said they are honing their ability to analyze it.

Less than half (47%) believe that other functions recognize the importance of risks. In a positive move, the risk function has improved its collaboration with finance, with 82% of respondents saying they have a close working relationship.

“By improving collaboration and arming themselves with new technologies, financial firms can make considerable progress in dealing with new threats, particularly when they have access to more data than ever before,” Beardshaw said. “Our research shows UK firms may have been slow to respond at first, but given the global competition, we’d expect their progress to accelerate.”