Mitigating the risks of AI integration

While there has been a shift towards finance teams wanting to focus more on value creation, it’s not surprising to see a third of CFOs also believe that their role will evolve to include ‘enhanced risk management and compliance oversight’ over the coming years.

We’re already seeing many additional risk areas being brought into the remit of finance functions, including ESG and non-financial reporting, and technological and strategic risks.

To help manage this increased scope, it's positive to see 34% of CFOs say they are leaning on technology solutions for risk monitoring, reporting, and mitigation. Using technology to take on these tasks will reduce the risk of human error and free them up to focus on more complex work.

AI as an emerging risk

While we aren't seeing entire industries be overtaken by AI technologies overnight, it has significant potential to create risks as they become more deeply integrated in businesses. People may underestimate the risks of applications of generative AI and implement changes without proper management oversight.

A key part of CFOs’ concern comes from uncertainty around AI’s applications. Knowing whether they’re comfortable taking on risks requires knowing what the risks are, but currently there’s simply not enough data to know this.

This underscores the need to invest in a robust risk management framework to be prepared for future threats, yet only 22% of CFOs shared with us that they have a 'robust and effective risk management framework without room for improvement'. 

Keeping strategy top of mind

Competitors may also use AI to shave costs, creating a more compelling commercial proposition for your customers. While it hasn't caused industries to be overtaken overnight, it’s important to plan now because once one company effectively uses AI, others will be able to replicate it.

CFOs need to remain calm, focus on business priorities, and explore AI use-cases thoroughly to mitigate potential long-term threats.

Taking the first steps

Thoroughly assessing the risks and rewards of AI requires investment. It will save you money in the long term, but in the short term, there's going to be a cost. The same goes for hiring talent with the skills needed for effective risk management. Cyber and AI skills are at a premium in the market.

CFOs will need to prioritise key risks and assess the consequences of inaction to identify the most impactful areas for investment.

For more insight on this topic, reach out to Emma Young, Business Risk Services Director.