The FINANCIAL -- Organisations should focus on developing stronger digital skills and capacity in their risk function in order to make more informed decisions about risk in a technology-driven world, according to the eighth edition of PwC's Risk In Review study.
The 2019 study has found that while many organisations have already embraced new technology as part of their internal audit, risk and compliance functions they are yet to fully realise the potential benefits of using the insights to inform decisions over investment in digital transformation.
PwC's study focuses on identifying what categories help top-performing 'digitally fit' risk functions stand out both in terms of their ability to strategically advise stakeholders on risk and assurance, as well as the risk function's own ability to adapt and embed new processes required by digital transformation.
The six habits of risk functions that fuel smarter risk-taking are:
Go all-in on the organisation's digital plan
Upskill and inject new talent to move at the speed of the organisation
Find the right fit for emerging technologies
Enable the organisation to act on risks in real time
Actively engage decision makers of key digital initiatives
Collaborate and align to provide a consolidated view of risks
PwC surveyed more than 2,000 CEOs, senior executives, board members, and professionals in risk management, compliance and internal audit, and interviewed dozens of executives and board members to explore what differentiates risk functions when it comes to digital transformation.
Jim Woods, Global Risk Assurance Leader at PwC says,
'Risk professionals are at a critical juncture. As technology transforms the way we do business - from data analysis to more automation - so too do the potential risks. At the same time, digital transformation is also driving the potential for identifying risk and making smarter decisions yet the study highlights that many risk functions are not fully realising this.
'Only 22% of chief executives who responded to PwC's 22nd CEO Survey called the risk exposure data they receive comprehensive enough for long-term decision-making - the same figure as ten years ago. This should indicate that risk functions are not harnessing the power of abundant data available.
'It is vital that risk professionals recognise that by improving their digital fitness they can take an active approach to becoming important partners and leaders in helping their organisations get better benefits from their digital initiatives.'
The study identifies the key components of an organisation's 'digital fitness' as:
Having in place the skills and competencies to strategically advise stakeholders on risk and provide assurance over the organisation's digital initiatives
Changing the risk function's own processes, tools, and services so they're more data driven and digitally enabled to anticipate risk events and respond to them at the pace and scale the organisation's digital transformation requires
Jim Woods says,
'Organisations with dynamic risk functions enjoy more effective risk management, which contributes to greater confidence in taking risks, a faster and safer digital journey, and greater-than-anticipated value from digital investments.
'Any fitness regime can seem overwhelming at first. Yet rather than dive straight in, you should develop a plan first and then focus on the steps you need to build up your capability over time.
'Risk professionals should take note of the plans followed by digitally fit organisations and be confident that they will start to see rapid rewards if they invest the time and resources required now.'