Of more than 1,590 C-Suite and other executives recently surveyed by Deloitte, 39.4% report the greatest benefit of using cognitive risk sensing is the early detection of emerging risks and potential threats. However, just 5.3% of respondents say their organisations use enterprise-wide cognitive risk sensing to manage such risks. In an era of hyper-connectivity, many organisations lack the cognitive technology or risk analytics needed to turn real-time data into meaningful and actionable information.
“Contending with emerging risks is a constant consideration for most risk management, legal, compliance and internal audit teams,” said James Cascone, risk and financial advisory at Deloitte & Touche LLP. “As cognitive technologies improve, analytics techniques evolve for detecting anomalies and recognising patterns across broad data sets. However, organisations that are sceptical of predictive analytics or are not as far along in their maturity may not be able to effectively anticipate risks or proactively manage disruptions. Organisational performance can also be adversely impacted if management is unwilling or unable to leverage risk intelligence to enhance resiliency and competitive positioning.”
Employing human insights
Cognitive risk sensing employs human insights with advanced analytics and machine learning to aggregate, analyse and synthesise the world’s available data to interpret signals — both threats and opportunities — more effectively. The intelligence generated can reveal emerging issues and disruptions to an organisation’s brand, products, services and third party ecosystem, as well as anticipate changes in the external environment.
Equally significant, cognitive risk sensing provides an ability to ingest internal company data to receive an integrated and forward-looking perspective that can help improve risk prioritisation.
Neil White, risk and financial advisory principal and global internal audit analytics leader at Deloitte & Touche LLP, added: “As internal audit teams and the organisations they serve use increasingly more advanced technologies to operate, cognitive risk sensing tools can really arm leaders with deeper information to ask tougher questions.”
To implement a true cognitive risk sensing capability across the enterprise, organisations should seek to address the following key considerations:
*Cast a wide net: Rather than monitoring a limited set of well-known risks, your risk sensing analytics should look at a broad view of critical risks, both unknown and known, and leverage copious amounts of data to detect issues early on and drive business growth
*Build context and maintain situational awareness: Before dismissing outliers as being insignificant, consider each new event or piece of information as providing an opportunity to refine the organisational vision and recalibrate the context. If an occurrence is strategically relevant, its rarity doesn’t in itself diminish its potential significance and impact on the organisation. Linking anomaly detection to the organisation’s strategy and business context keeps it rooted in risk management rather than reducing it to forecasting for its own sake
*Adopt an outside-in approach: An external, integrated view can provide greater context to internal data and analysis and thereby help in evaluating assumptions and potentially erroneous data and conclusions. Additionally, external data points can be presented to management, facilitate internal discussions and also be used to test scenarios designed to gauge the likelihood of outcomes and their potential impacts