In November 2019, FERMA launched the first thought paper on the implications of artificial intelligence (AI) for risk management.
To write this paper, FERMA brought together a group of experts from within and beyond the risk management community. The ambition was to develop the first thought paper about AI applied to risk management.
The goal was first to perform an initial assessment of the potential value of AI to improve enterprise risk management (ERM), and second, to understand how risk managers can be key actors in highlighting to the organisation leadership the opportunities and challenges of AI technologies.
This paper aims to guide risk managers on applying AI from a basic understanding to developing their own strategy on the implementation of AI. It includes an action guide and a template for risk managers to develop their own AI risk management roadmap.
In terms of ERM, risk managers will want to consider how AI can be best used:
- How can risk management frameworks integrate AI, especially as a source of new risks across the organisations?
- Can we process more data to mitigate losses?
- How can we use AI in the claims process?
- What processes will we create and what will be provided by brokers, insurers and re-insurance companies?
The report states that to perform well, AI needs data of a certain quantity and quality. The very first question to consider is therefore about the organisation’s strategy for managing its corporate data. As such, solving the data issue and implementing AI in business is a challenging project that impacts many corporate functions, including the risk manager.
The authors expect corporate risk management to benefit from AI in several areas.
- From its ability to process large amounts of data to the automation of certain repetitive and burdensome risk management steps, AI could allow risk managers to respond faster to new and emerging exposures.
- By acting in real time and with some predictive capabilities, risk management could reach a new level in supporting better decision-making for senior management.
Read the complete report here.
Find the relevant section for you:
- What is AI?
- Why is now the time to focus on AI?
- Data is Key
- Integrating risks generated by AI in the ERM framework
- Scope of AI-related risks
- General benefits for risk management
- AI Action Guide for Risk Managers
- Developing an AI Roadmap
- Selected historic steps of AI
- Template: Your AI Risk Management Roadmap
- Top Reads
- FERMA Expert Group
Which opportunities is Artificial Intelligence creating for better risk management?
Why should risk managers look at Artificial Intelligence now?
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