I am going to look into my AI-enabled crystal ball and imagine the world of the future (the not-too-distant future) decision-maker. Then I will look again to see what the risk practitioner and the internal auditor are doing in this new world.
The first thing I notice is that the word, “risk”, has been removed from the business vocabulary. COSO ERM and ISO 31000 are extinct.
Instead, we are in a world where people talk about “what might happen” and “how will we achieve our objective”.
When a decision is needed, our intrepid decision-maker, Alex, asks his faithful AI, George, a series of questions.
“George, when do we need to purchase new supplies?”
“You have sufficient supplies for three month’s usage based on historical averages and the forecast I prepared for you last week. Do you want me to update that forecast?”
“Yes.”
“Your forecast usage has not changed.”
“OK. So when do we need to purchase new supplies, given lead times?”
“If you place an order for the normal quantity today, there is an 85% probability that you will receive the supplies a week before they are needed in manufacturing, a 10% likelihood that they will arrive within a day of needing them, and a 5% likelihood that they will be late. Here is more information. There is a 3.5% likelihood that they will be…
