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Defining the risk function’s sphere of control

December 03, 2019

In brief

  • In a complex risk climate changing faster than ever, financial services risk leaders can find ways to define a sphere of control.
  • Accenture’s Global Risk Management Study identifies risk leaders’ most pressing concerns, such as disruptive technology and data breaches.
  • Our industry-specific reports share how risk leaders in banking, capital markets and insurance can prepare their firms to keep pace with change.

In the 10 years that Accenture has surveyed financial services risk leaders, we’ve seen them respond to complex post-financial crisis regulations, defend against increasingly sophisticated fraud and financial crime attacks, and tackle business-crippling cyber-attacks.

 

But changes in today’s risk environment are moving with unprecedented speed. New threats are difficult to untangle and address. Accenture’s 2019 Global Risk Management Study finds that, despite a decade of addressing evolving changes, risk leaders face a bar higher than ever.

 

In a volatile, fast-paced climate, risk managers should have a clear view of the factors they can influence and the assets they should protect. This is their sphere of control.

A relentless pace of complex, interconnected change

Of the risk executives we surveyed, 72 percent say complex, interconnected new risks are emerging faster than ever. Risk leaders cite these top three challenges:

  • Disruptive tech risk: Among surveyed risk leaders, 58 percent say disruptive technology risk has a bigger impact today than two years ago.
  • Data breaches: 55 percent say data breaches pose a bigger, more complex threat with broader reach.
  • Operational risks: 52 percent cite operational risk—a traditional but ever-present threat, as a concern.

How can risk leaders face their leading threats?

Risk managers should keep pace with rapid change. But some of the potential solutions might bring new risks. Others offer more straightforward answers.

Going digital to manage digital threats

One concern for risk leaders involves new technologies.

  • The risk from disruptive new technology is a rising concern for function leaders.
  • New tech can drive efficiency and growth but can bring unforeseen consequences.
  • Take artificial intelligence. Only 11 percent of risk leaders feel fully capable of assessing the risks that may come with AI.

Getting a boost from smart technology

Users of smart technology such as machine learning (ML) report better risk readiness.

  • Among ML users, 73 percent are satisfied with two-year progress vs. 45 percent of non-users.
  • Despite benefits, risk functions’ use of the most sophisticated technologies is limited. Only 10 percent are, for example, applying ML to datasets.

Tapping added value from data

Financial firms see potential value in new data sources.

  • For example, within two years 57 percent of respondents plan to use marketing data to help manage risk, but only 39 percent do so now.
  • But 39 percent of respondents are not confident they can gain insights from new data sources at the pace needed to respond to new threats.

Collaborating for better risk readiness

Collaboration can mean better risk mitigation—and added value.

  • Respondents report better coordination with finance. But only 22 percent say risk and finance equally contribute to corporate strategy and enterprise risk management steering.
  • Is the function valued? Just 55 percent think other organizations recognize the important role risk plays.

For risk leaders, what’s next?

Complex, interconnected risks are multiplying faster than ever. For risk leaders it is impossible to be fully in control in this environment. What can they do?

 

We recommend clearly defining factors within the risk function’s control and designating assets that should be protected. This is a risk leader’s sphere of control. Leaders who define their sphere are better prepared to anticipate, assess and mitigate new threats—and should be ready when risk strikes.

About the Authors

Steve Culp

Senior Managing Director – Strategy & Consulting

Aliette Leleux

Managing Director – Strategy & Consulting, Client Lead

CHRIS JOHNSTON

Managing Director – Strategy & Consulting

FABRIZIO SARROCCO

Managing Director – Strategy & Consulting

Explore the findings within each industry

Banking Global Risk Management Study

Do banking risk teams need a fresh approach to manage the threats unleashed by emerging tech, open banking and relentless competition? Read more.

Capital Markets Global Risk Management Study

See how new tech, LIBOR retirement and regulatory pressure have transformed dormant risks into real threats for capital markets risk leaders.

Insurance Global Risk Management Study

Learn how insurance companies are braced for unknown consequences of new tech, aggressive competition and changing client expectations.

Get the essentials

With interconnected risks accelerating faster than ever, how can risk functions keep up? Our 2019 Global Risk Management Study provides insights to help functions prioritize, prepare and proactively scan the horizon for the next threats.

The Big Read

20 minute read

Full Financial Services Report

We surveyed 683 financial services risk executives to discover their top concerns impacting the business and to explore how they can respond by defining their function’s sphere of control.

REGISTER TO VIEW REPORT

Short on time?

Slideshare

10 minute read

What top-line risk trends did our Global Risk Management Study identify? See our presentation for highlights.

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