Pulling off a digital transformation is hard enough as it is, with companies perennially struggling to capture value on their investments. Digitizing a company’s risk function is even harder. As this classic 2017 article observes, evolving regulatory requirements can waylay many digital efforts, and applying the standard test-and-learn approach of traditional digital transformations to risk processes can create an unacceptable level of, well, risk. Yet then, as now, the promise of digitizing the risk function to boost efficiency and improve decision making remains alluringly high—if leaders can craft a fit-for-purpose approach that minimizes costly glitches and addresses regulatory expectations.
Where to begin? Companies looking to build an effective digital risk program can start by taking a lesson from banks, which have found value in targeting three specific areas: credit risk, stress testing, and operational risk and compliance. Digitizing in these three areas can help banks accelerate decision making for credit delivery, automate fragmented stress-testing processes, and help streamline alert generation and case investigations.
With today’s proliferation of new technologies such as generative AI, companies’ digital efforts will only increase, from capability building to customer service to operations—and certainly to risk. To stay ahead of the curve, read Saptarshi Ganguly, Holger Harreis, Ben Margolis, and Kayvaun Rowshankish’s 2017 classic, “Digital risk: Transforming risk management for the 2020s.”
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