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GLOBAL RISK LANDSCAPE 2021
GLOBAL RISK LANDSCAPE 2021
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Uma Rajah, co-founder and chief executive of UK prime property finance lending and investing platform CapitalRise, says advances in risk management technology have enabled fintechs to revolutionize the old-fashioned, manual processes used historically by lenders. As a result, the alternative lending market has grown exponentially over the past decade and established itself as an attractive alternative to traditional bank lending. “The use of sophisticated risk management technology can lead to better quality risk decisions which can drive lower default rates and result in cheaper sources of capital for borrowers,” she says.
These companies are missing an opportunity to deploy predictive analytics to understand the impact of future events, says Richard Speigal, Business Intelligence Centre of Excellence lead at UK building society Nationwide. “Obtaining and analysing accurate data to model scenarios and plan future business risk is key to making informed business action that improves outcomes,” he says. Speigal says Nationwide deployed Qlik analytics dashboards to enable teams to compare and analyse potential business outcomes before making decisions. For example, during the pandemic, the insights enabled the business to predict a continued increase in call centre demand. “We identified branch staff who were experiencing decreased in-person demand and were able to redirect calls to them, which helped us maintain team levels in-branch and continue to offer high levels of customer service despite the increase in demand,” he adds. Also in the financial services sector, there is demand for better risk management to deliver responsible and robust financial solutions.
CROs AND TECHNOLOGY
34 %
Technology advocates are emerging from unexpected C-suite roles.
of CROs categorise their use of technology as “predictive”
Behind only chief financial officers (CFOs) in terms of driving general digital transformation, chief risk officers (CROs) are leading on deeper technological advancements like data analysis. More than three times the number of CROs consider their use of technology as “predictive” compared to the average across all respondents (34% to 11%). Only 5%of chief executive officers say the same. When askedwhat changes their companymade as part of its response to the pandemic, 40% of CROs and 47% of CFOs said they accelerated their digital transformation efforts. This is compared to just 29% of chief technology officers and 36% of chief information officers.
5 %
compared to just 5% of CEOs
these unlikely partners are at the forefront of driving transformation.
KNOW YOUR ORGANIZATION
“This allows the organization to not only clearly articulate and demonstrate differential and return on investment to customers, but also understand the long-term impact of these engagements on the profit and loss, and company valuation,” says Chaudry. Indeed, his counterpart in risk, CRO Martin Hawkes, says that throughout the pandemic, Foodhub has utilized technology and data to assist the restaurant industry. “This has enabled us to not only survive, but often thrive through providing data and tools that increase the restaurant’s engagement with consumers, to help drive food orders and the productivity of restaurants in terms of streamlining the ordering and food delivery process as well as food production,” says Hawkes.
“Everything in business is risk,” says Mike Elliott, chief executive at internet of things management platform Over-C, which advises football and rugby clubs, shopping centres and gyms on avoiding risk by transforming their premises into “smart” venues.
“Whether you’re reopening your business after a pandemic, expanding into new
“The CFO and CRO roles have migrated over the last decade,
from being on opposite sides of the argument to being boardroom allies,” says Mohamed Chaudry, CFO of online food delivery service Foodhub. “This alignment has been driven by an understanding that technology is at the forefront of being able to provide both competitive advantage and critical data insights.”
markets or launching new products and services, there is always a risk profile. The best way to deal with risk is to better understand your organization and its strengths and weaknesses, which requires good data analysis. Collecting and understanding data will help form risk insights and inform decision-making and ability to deal with certain risks,” he says. The results indicate risk management is not only a driving force behind technological innovation and improvement, but also that technology is essential in the evolution of risk management: from reactive to proactive to predictive. The good news is that computing power and technologies like cloud computing and AI mean data can be far more accessible than ever before. But organizations can’t rely on technology alone. They must be sure they are set up culturally and organizationally to use the insights they uncover and be prepared to act. Before it’s too late.
The top three most significant pressures caused by the pandemic
Low employee satisfaction and wellbeing
45%
Inadequate technology / lack of digital transformation capabilities
43%
Internal cultural issues
30%
As the two roles have become increasingly focused on technology,
Geopolitical risks
28%
Security-related risks
24%
Inefficient, inflexible processes that were difficult to sustain during lockdown
23%
What changes did your company make as part of its response to the pandemic?
ESG-related risks
21%
Accelerating digital transformation efforts
Increasing data analysis capabilities
Crowded competitor landscape and successful rivals
20%
Reputational risk
19%
Lack of funding or cash-flow issues
18%
Lack of engagement with customers/ not being able to meet customer needs
15%
Chief risk officer
Chief financial officer
Chief technology officer
Chief information officer
Chief executive officer
Managing director
Other C-suite
Supply chain disruption
13%
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