Technology has become ingrained in nearly all aspects of modernsociety. As it evolves over time, so too do the risks that comewith it.

Businesses today need technology to compete with others andadvance their product. To calculate the number of risks theymay face, risk management professionals need to understand thecompany from top to bottom. Yet risk management processes are notkeeping pace with technology's associated risks, according to a newreport by Marsh and RIMS.

The 15th annual Excellence in RIsk Management report delves intorisk professionals' knowledge of and role in managing technologyinnovation such as artificial intelligence (AI), blockchain and theInternet of Things (IoT). Overall, survey respondents did not feelthat they have enough knowledge about these disruptive technologiesto contribute to discussions about them at a “strategic advisor”level. The findings from the report were released at the RIMS2018 Annual Conference & Exhibition.

Three technologies impacting risk management

For risk executives, AI can enhance risk-related insights anddecision making. For example, automated analysis of large trends ofloss reports can help to identify trends in a manner that would nototherwise be possible. But the survey notes that one key to an AIstrategy for managing risks is to first get the data and analyticsside of the house in order.

Blockchain has the ability to provide a range of benefits in therisk and insurance ecosystem. It can easily lead to cost reduction,around-the-clock data accessibility and fraud detection. However,only 24% of respondents said their organization either uses or isexploring the technology.

IoT systems allow enterprises to make value-adding decisions inreal time, with increased flexibility regarding their approach toefficiency, cost reduction and risk modification. But it'simportant to acknowledge the possible downsides. IoT increases theloss potential from data security breaches as more sensitive dataare being created and stored on networks.

Risk committees continue to be underutilized

One of the ways risk managers can further strategic discussionsaround technology and innovation is by assuming a leadership rolein their organization's cross-function risk committee.

The survey found about 60% of organizations said they have sucha committee. Among those who said they do not have such acommittee this year, 35% said their company should have one.The collaboration from such a committee can help generatediscussion and alignment around everything from innovative uses ofdata and risk finances to capital expenditures.

The future of risk management looks promising if AI, blockchainand the IoT can be strategically used. With disruption rapidlybecoming the new normal, risk professionals will need updatedinsights to help them make the best strategic decision possiblegoing forward.