How AI is Hijacking Risk Management Jobs

Imagine you are building a world-class risk management team for a non-financial company. Who would you hire? For my risk management team, I need a researcher, a decision analyst, a quant, and a culture ambassador.

However, did you know that Artificial Intelligence (AI) is now capable of some tasks that these roles perform? Let’s get into each risk management role and how AI can now expedite these jobs.

The Researcher

For a risk management team, I need someone who can scour reports, news articles, and regulatory updates to identify emerging risks and trends. This demands a keen eye for detail and a deep understanding of the industry.

The researcher must be able to connect the dots between seemingly disparate pieces of information, anticipating how changes in one area could ripple across others. This might involve understanding how a natural disaster in one part of the world could disrupt supply chains or how a political shift in another country could affect trade policies and create new risks for the organization.

Ultimately, the researcher’s role is to provide a clear-eyed assessment of the risk landscape, enabling the organization to make informed decisions and take proactive measures to protect its interests.

How AI Can Perform the Tasks of a Researcher

An AI model or a specialized risk management chatbot like free RAW@AI can rapidly analyze vast amounts of unstructured data from diverse sources, summarizing key insights and highlighting potential threats. AI can also be trained to continuously monitor information feeds, alerting the team to relevant developments in real time.

According to a 2022 report by IBM, AI systems detected and responded to security breaches an average of 40% quicker than human-led teams. This frees the researcher to focus on deeper analysis and strategic decision-making.

Here are just some of the tasks AI can perform quicker and comparable in quality:

Continuously scanning massive volumes of news, social media, and regulatory updates for emerging risks (it’s possible; I don’t have a chatbot for that yet, but let me know if you found something).
Identifying patterns and correlations in large datasets to predict potential future risks (RAW@AI GPT, which requires a ChatGPT Plus subscription to use, does that easily and quickly).
Quickly condensing lengthy reports and documents into concise summaries (RAW@AI GPT, required ChatGPT Plus subscription to use, does that easily and quickly).
Analyzing competitor actions and market trends to assess potential threats and opportunities (free RAW@AI can do it; no registration required).
Exploring different potential future scenarios and their impact on the organization (free RAW@AI can do it, no registration required).
Automatically identifying and classifying risk factors from unstructured text (free RAW@AI can do it; no registration required).
Conducting comprehensive literature reviews and summarizing key findings (free RAW@AI can do it, no registration required or use RAW@AI GPT, required ChatGPT Plus subscription to use).
Monitoring regulatory changes and assessing their impact on the organization.
Identifying unusual patterns or outliers in data that may indicate emerging risks (RAW@AI GPT, required ChatGPT Plus subscription to use, does that easily and quickly).

The Decision Analyst

I need a decision analyst to serve as a bridge between quantitative risk analysis and decision-making. The analyst helps me identify opportunities to integrate risk analysis into various business processes, such as investment decisions, project evaluations, and operational planning. I also use analysts to review decision models, identify and challenge key assumptions, translate quantitative results into actionable insights, and monitor risk mitigation.

AI’s Capabilities in Analytics

AI has already transformed the role of decision analysts by automating time-consuming tasks and augmenting their analytical capabilities. Here are some of the tasks that AI can perform with increasing speed and accuracy:

Identifying potential biases or limitations in existing decision-making models, suggesting improvements, and assessing the suitability of different risk assessment methodologies (free RAW@AI can do it, no registration required or use RAW@AI GPT, required ChatGPT Plus subscription to use).
Critically analyzing the underlying assumptions of risk models and assessing their validity (free RAW@AI can do it, no registration required or use RAW@AI GPT, required ChatGPT Plus subscription to use).
Interpreting the output of quantitative risk models and communicating findings in a clear and concise manner to both technical and non-technical stakeholders (free RAW@AI can do it).
Tracking the implementation and effectiveness of risk mitigation measures, identifying emerging risks, and recommending adjustments as needed (free RAW@AI can do it).

The Quant

Next, I need a quant—a mathematical genius who can apply quantitative techniques to model and measure the effect of risks on decisions. This individual should be able to construct intricate models that simulate potential scenarios, assess the effect of various events on cash flows, and quantify the financial implications of different decisions.

A deep understanding of statistics, probability theory, and financial mathematics is essential, as is expertise in programming and data analysis tools. If you ever tried, you know how difficult it is to hire one who understands risk management in non-financial companies.

How AI Can Replace the Quant

You would be surprised that some AI models can now do all this and more. AI models with access to the Python environment can perform calculations more complex than 95% of risk managers out there. Here are just some of the tasks AI can perform quicker and with less errors:

AI can quickly clean and standardize large datasets, ensuring data quality and consistency for subsequent analysis (RAW@AI GPT can now do this).
AI can automate the process of calibrating and validating risk models, ensuring that they are accurate and reliable (RAW@AI GPT can now do this).
AI can run thousands of simulations to assess how changes in model parameters or assumptions affect the overall risk profile, providing valuable insights into the key drivers of risk (RAW@AI GPT can now do this).
AI can generate a wide range of potential scenarios, allowing for the assessment of the impact of different events on the organization’s financial position (RAW@AI GPT can now do this).
AI can quickly backtest risk models against historical data to evaluate their performance and identify potential weaknesses and more (RAW@AI GPT can now do this).

The Culture Ambassador

Finally, I need a culture ambassador—someone who can foster a strong risk awareness and accountability culture throughout the organization. This person should be a natural extrovert, able to inspire and motivate others to embrace risk management as an integral part of their roles and decisions.

They should be skilled communicators who can translate complex risk concepts into easily understandable language for employees at all levels. They should also be adept at designing and implementing engaging training programs and communication campaigns that promote risk awareness and encourage proactive risk mitigation behaviors—just like RISK AWARENESS WEEK 2024 later this year.

How AI Can Take on the Role of Culture Ambassador

You guessed it—AI can now support many aspects of building a risk culture, making it more accessible and engaging for employees:

AI can tailor risk management training materials to the specific roles and knowledge levels of individual employees, making the learning experience more relevant and effective (free RAW@AI can do it).
AI can create realistic risk scenarios and simulations, allowing employees to practice their risk management skills in a safe and controlled environment (free RAW@AI can do it).
AI can gamify risk management training, making it more engaging and fun for employees (free RAW@AI can do it).
AI can provide employees with immediate feedback on their risk management decisions, helping them learn and improve their skills (free RAW@AI can do it).
AI can help translate complex risk concepts into plain language, making it easier for employees to understand and apply risk management principles in their day-to-day work (free RAW@AI can do it).

Want to learn more about how to stay competitive and not lose your job to AI? See you at RAW2024, where you can invest in your professional future and level up your organization. Sign up today!