The productivity gains offered by emerging technologies could transform asset owners’ risk management protocols, but fully adopting these new systems remains a challenge.
A September report from the International Forum of Sovereign Wealth Funds underscored this issue. Three-quarters of funds surveyed by the organization said they use technology in their compliance efforts—including using third-party background check tools—or in due diligence. However, only 15% of respondents said they use artificial intelligence to support compliance efforts, including in third-party risk management or risk assessment.
Given the zeitgeist surrounding AI, institutions may feel an urgency to have a strategy for its use, yet remain unsure how to create one and how to judge services offered by AI companies, many of them startups. Dan Johnson, managing director at F2 Strategy, an outsourced chief technology firm, says, “It’s made it very difficult for firms to answer a very basic question: ‘What can AI do?’ and ‘What does effectively leveraging AI actually mean?’”
Like any new technology, AI has pros and cons. When it comes to risk management,…
