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GLOBAL RISK LANDSCAPE 2021
GLOBAL RISK LANDSCAPE 2021
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RISK, TECHNOLOGY AND TRANSFORMATION Technology, notably predictive analytics, has helped many organizations unlock a positive response to the challenges of a global pandemic
Research shows effective risk management relies on technology – and no event has highlighted the need for predictive analytics more than the COVID-19 pandemic. “We’re in an era in which large-scale, disruptive and divisive events are not only more frequent, but are being communicated about faster than ever before. Businesses and their leaders are increasingly being defined by their response during and after these critical moments,” says Helen Sutton, senior vice president, EMEA and APAC sales, at Dataminr, which uses artificial intelligence (AI) to provide real-time information alerts to clients. As a result, businesses need to respond to risks and emerging crises with greater agility and precision than ever before and are therefore seeking out technologies that bridge those gaps in response and risk management planning. Our research confirms this view as 42% of respondents cited inadequate technology as a top-three risk that applied extra pressure on them during the pandemic. For risk- averse respondents, this was the number- one pressure point.
themselves cushioned from the impact to a greater degree. Some 73% of the firms that said the pandemic’s impact was “much less significant than expected” had prioritized digital transformation. Technology can enable near real-time automated processing of interactions to assess for risk, says Jason Lane-Sellers, director of fraud and identity at data and analytics provider LexisNexis Risk Solutions. If applied appropriately, this means that operations can shift their approach to enable proactive assessment and intervention. “Due to the volume and scale this automation provides, it can also mean that the utilization of technologies such as machine learning can move risk assessment to be predictive in nature, to provide better risk prevention and improved capability in changing environments,” he says. Conversely, we witnessed the collapse of companies that may have failed to leverage the data available to them. These included major bricks-and-mortar retail chains. With access to consumer, category and market trend data sooner, there may have been opportunities to redesign those businesses. “For those that had already begun to invest in this area, they will have had more of a chance to regroup quickly and make better decisions to capitalize on micro-opportunities as they presented themselves,” says Matt Andrew, UK managing director and partner at data science firm Ekimetrics. Andrew says one client that did invest in such forecasting was Accor, Europe’s biggest hospitality brand. He said they were able “to take quick and nuanced decisions that saw them continue to market profitably throughout 2020, despite being in one of the worst hit sectors with ongoing uncertainty across a number of markets”.
Positive strategy changes made in direct response to the pandemic
Investing in new technology/ accelerating digital transformation efforts
36%
Pivoting cost and business models
32%
Reducing headcounts and streamlining resources
29%
Proactively altering working culture to suit a new remote workforce
24%
ACCELERATION OF DIGITAL
Shoring up supply chains
20%
At the same time, 57% of all respondents saw the acceleration of digital transformation as one of the top three positive changes stimulated by the pandemic. When asked what changes their organization made in response to the pandemic, the top response was investing in new technology or accelerating digital transformation efforts, cited by 36% of respondents. For Enric Domenech, Risk & Advisory Services lead at BDO Spain, this finding is not surprising. “The pandemic underlined how important it is to react and adapt at speed,” he says. “Flexible process must be combined with adequate technology for rapid reaction.”
Increasing data analysis capabilities
16%
Implementing more rigorous ESG policies
14%
Increasing headcount and hiring new talent
MISSING AN OPPORTUNITY
Interestingly, those who invested in technology during the pandemic found
12%
Despite this precarious position, only 11% of respondents said they currently use technology in a predictive way to forecast future potential risk. This implies organizations are still improvizing when it comes to their risk management function.
Flexible process must be combined with adequate technology for rapid reaction
Offering completely different products or services
3%
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