Getting 2025 Ready: AI & Data Transformation in Non-Financial Risk Management
The 4th annual Women in Risk and Control (WiRC) event, an Acin initiative, was hosted in partnership with Deutsche Bank this year, uniting leaders in financial services to examine how AI and data transformation are revolutionising Non-Financial Risk Management (NFRM). With 2025 around the corner, this year’s gathering provided critical insights into preparing for a rapidly changing risk landscape.
This impactful event featured a panel discussion with experts from major financial institutions, personal development breakout rooms, and valuable networking sessions.
Here’s a closer look at the key themes and takeaways from WiRC 2024:
1. Data Transformation and the Future of Risk Management
The Importance of Data Quality
Financial institutions are increasingly recognising the need to move towards automated, data-driven risk processes. However, this shift underscores a crucial challenge: data quality. As the saying goes, “rubbish in, rubbish out.” Without high-quality data, even the most advanced AI-driven tools cannot effectively manage risk. Panellists stressed that implementing robust data governance frameworks and ensuring data accuracy and consistency are fundamental to unlocking the true potential of AI in NFRM.
Leveraging Data for Predictive Analytics
Predictive analytics is emerging as a powerful tool for risk professionals, enabling proactive identification of potential risks before they escalate. Through AI and machine learning, institutions can analyse historical data patterns to forecast future scenarios, providing a competitive edge. The panel highlighted examples where predictive analytics helped institutions spot early warning signals, allowing them to mitigate risks in a timely manner. Moving forward, this capability will be essential for staying ahead of regulatory expectations and market dynamics.
2. The Role of AI in NFRM
Automating Compliance and Reducing Human Error
AI technology is transforming compliance management by automating routine tasks, thus reducing human error. Traditional, manual compliance checks are resource-intensive and prone to mistakes, which can lead to regulatory penalties. With AI, institutions can streamline these processes, allowing risk teams to focus on more strategic activities. During the panel, speakers shared real-world examples of how AI has automated aspects of risk assessments, resulting in more efficient and accurate compliance operations.
Enhancing Decision-Making Through AI-Driven Insights
Beyond automation, AI provides powerful analytical capabilities, enabling data-driven decision-making. AI tools can rapidly analyse vast datasets, uncovering insights that may not be immediately visible to human analysts. By leveraging these insights, risk managers can make more informed decisions that align with both regulatory demands and business objectives. However, as panellists pointed out, the effectiveness of AI-driven insights relies heavily on a companies foundational data quality and governance practices.
3. Breakout Sessions: Building Skills for the Future
WiRC 2024 also included three breakout sessions designed to equip participants with the skills necessary for personal and professional growth:
Building a Personal Brand
The Personal Branding breakout room emphasised the importance of self-presentation in today’s digital age. Attendees learned how to craft an effective elevator pitch, tailor their LinkedIn profiles, and network with the right people within and outside their organisations. In an era where online presence significantly impacts career progression, understanding how to communicate one’s unique strengths and professional value is critical. Tips were provided on building visibility without breaching internal policies and how to maintain a professional brand as an introvert.
Effective Communication
The Communication session explored ways to enhance interpersonal skills in a risk-focused environment. Attendees discussed adapting communication styles to suit different stakeholders, an essential skill in risk management. Effective communication can help avoid misunderstandings that lead to regulatory breaches and strengthen trust within teams. Participants left with strategies for navigating difficult conversations, fostering clearer, more impactful interactions.
Navigating Career Mobility
The Mobility session addressed career advancement and overcoming challenges related to role transitions. Attendees discussed strategies for avoiding career stagnation and positioning themselves for new opportunities, whether through internal promotions or lateral moves. Real-life examples of individuals who pivoted careers or successfully returned to work after a break were shared, offering practical inspiration. The importance of continuous learning and active listening was underscored as essential traits for those seeking to adapt and progress within the dynamic landscape of financial services.
4. Preparing for 2025 and Beyond
Adapting to Evolving Regulatory Expectations
With regulators increasingly focused on AI and data governance, financial institutions must stay proactive. The event highlighted that regulatory bodies are placing greater emphasis on transparency and accountability in AI applications. Institutions should prepare for more stringent reporting requirements and ensure their AI systems are explainable and compliant. Panellists urged organisations to adopt flexible governance models that can quickly adapt to new regulations and technological advancements.
Fostering a Culture of Innovation and Collaboration
As risk management becomes more technology-driven, fostering a culture that supports innovation and cross-functional collaboration is vital. Companies must encourage teams to embrace new tools and methodologies while maintaining a keen focus on ethical considerations. The event reinforced the idea that innovation should not come at the cost of ethical standards. Instead, it should align with an organisation’s core values, ensuring that risk management remains both effective and responsible.
Summary
WiRC 2024 underscored the pivotal role that AI and data transformation will play in shaping the future of Non-Financial Risk Management. As the financial services industry moves toward 2025, institutions must prioritise data quality, adopt AI for compliance and decision-making, and cultivate an agile, innovative culture. By addressing these areas, organisations can not only meet the challenges of tomorrow but also seize new opportunities to advance their risk management practices.
The FCA’s 2023/24 Annual Report showed a sharp increase in the number of Skilled Persons Section 166 (S166) reviews – from 44 commissioned in 2022/23 to 83 in 2023/24. Of those 83, 26 were focused on controls and risk management frameworks. Depending on the findings, S166 reviews can be a precursor to additional enforcement action. Demonstrating to the Skilled Person that risk and control frameworks fully cover their regulatory obligations can negate the need for regulators to intervene further. Finally, regulatory examinations can unfold with unforeseen consequences. In the US, fines of over $3bn have been levied for the use off-channel communications. However, these record keeping infringements were discovered during SEC and CFTC investigations into wider market abuse issues. Potential breaches that banks may think the regulator is looking into do not necessarily always end up being the ones that being sanctioned. Anticipating these ‘accidents’ is nearly impossible, but this case highlights the need for a clear and holistic understanding of where there is potential regulatory risk exposure with respect to control frameworks in a way that is dynamic and responsive to broader enforcement themes.