Although large financial services institutions have been applying technologies such as cloud computing, biometrics and big data analytics to their risk-management functions, two-thirds of executives say skills deficiencies are hindering the effectiveness of those risk-management measures as technologies continue improve.
Specifically, 66% of the 475 senior risk management executives surveyed for the 2017 Global Risk Management Study, conducted on behalf of Accenture, believe that a shortage of core risk-management talent and skills impedes the effectiveness of their risk-management efforts. Only 10% of survey participants said their risk-management teams have the internal resources to complete functions they're asked to perform.
As it turns out, technology is evolving faster than many firms can acclimatize. For example, 73% of executives surveyed attributed the "velocity, variety and volume" of data as hampering the effectiveness of their risk-management functions. Firms are struggling to develop the skills necessary to adapt to great information flows and benefit from other opportunities.
"As the nature of risk becomes more and more diverse and the amount and the quality of data explodes, the need for the skills to bridge core risk management and new technologies is more urgent than ever," says Steven Culp, senior managing director of Accenture's finance and risk practice for financial services, in a statement.
"Since the 2008 financial crisis, the world has changed dramatically. Previously, financial institutions responded to regulatory and control issues by adding talent. Now, they must pivot to increase the skills of their talent to keep pace with new realities of data and technology," he adds. "While technology cannot replace experience and good risk-management discipline, the risk teams that will be most effective at integrating technologies like big data to recognize patterns and test hypotheses will be the ones that are best positioned to outperform their peers."
A skill shortage, in particular, has been an ongoing issue for financial services institutions since the global financial crisis a decade ago, Accenture reports. Case in point: 32% of risk-management executives named resources and talent as a critical challenge in 2009 when Accenture began conducting the risk-management study. Two years later, 53% of executives were still reporting plans to increase the number of employees. In 2015, only 41% of executives felt their organizations had the digital technology skills needed for risk management.
The most common method of dealing with this talent shortage is looking outside of the existing workforce to expand the team. Approximately half of survey participants for this year's study said they plan to increase outsourcing in areas such as technology implementation, risk reporting and risk measure calculation.
The study is based on a telephone survey of 475 senior risk -management executives that Longitude Research conducted on behalf of Accenture in January and February.
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