Digital Transformation of Risk Management – Part I Introduction

It is the job of risk professionals to create a corporate culture that focuses on risk management and aims to create strategic value in organizations. However, nowadays, it is not possible to act in any practice without the support of technology. In this section, I will try to explain the role of existing technologies in creating an effective risk management strategy.

What is the Role of Technology in Risk Management?

We are more experience of seeing problems. We may have more data sources, but creating value by measuring them has become just as complicated. If we agree with me that risk management is not just about preventing possible accidents or keeping compliance records of the company, but maximizing potential, then let me summarize why I think the human effort will not allow doing this in these times:

1. It is necessary to analyze big data to find not only fraud/errors but also the opportunity to do better. But let’s face it; Analyzing big data doesn’t seem like something human beings can do.
2. With the sampling method that has been used for years, it is not possible to control what’s happening around the organization. Instead of doing risk analysis & audit afterwards, it is necessary to use forethought approach with risk activities.
3. It’s great that almost all the business processes are starting to be managed one by one with software. Now we have footprints of many data that were not recorded before. However, this data is now available in such a dispersed topology that there is no human being exist to consolidate this data and then analyze it. We don’t have enough expertise and never will.
4. Even if we have the intelligence and resources to do all this somehow, time is men’s worst enemy. In order to create strategic value from business data, we must be quick, we must be able to take action immediately right after the event occurs.
5. Although the risks are analyzed with both quantitative and qualitative methods, unless they are consolidated by a single approach/procedure, we will not be able to avoid grappling with additional costs because we will not be able to obtain an objective perspective against risks. Objective insight can only be provided by technology and human interaction.