The Accenture report is based on a survey of nearly 700 risk management executives in banking, insurance and capital markets worldwide.

It notes that the external risk environment is becoming increasingly complex, with risk teams in Australia having to adapt their approaches to combat new threats and an accelerated pace of change.

Almost half of Australian respondents (46 per cent) said the risk function was at best only somewhat effective in responding quickly to changes in the external risk environment.

Only 8 percent of Australian risk managers describe themselves as fully capable of assessing the risks associated with the adoption of artificial intelligence in their organizations.

Fewer said they were fully capable of assessing the risks associated with robotic process automation (RPA) or blockchain (6 percent and 7 percent, respectively).

Thales Lopez, managing director in Accenture's financial services practice in Australia and New Zealand, said risk and compliance functions were "no doubt under enormous pressure" following the royal commission and now in the COVID-19 crisis.

"Covid-19 shows us that holistic risk management is more urgent than ever, putting additional pressure on banks to have the right capabilities in place," Mr Lopez said.

“Data analytics is also very much at the center, as most of today's regulations are data-driven. This means that financial institutions must prioritize risk data management systems while ensuring quality, security and transparency, providing new reports for multiple purposes.

"Strong data analytics is more important than ever, especially now during a global pandemic of unprecedented proportions, enabling risk managers to generate risk insights and strategies in these uncertain times."

In addition, risk functions are tackling the threat of cyber and financial crime, with concerns about customer data.

"We know there is an increase in the number of domains being registered globally to support a wide range of malicious activities, including identity harvesting, card fraud and malware installation," Mr Lopez said.

According to the study, the top three barriers to implementing advanced analytics in the risk function are data that resides in silos, lack of clarity around regulation, and challenges in integrating with legacy systems.

More than two-thirds of Australian risk managers (70 percent) say they are improving their ability to collect enterprise-wide data, and 62 percent say they are improving their ability to analyze it.

The survey noted that 61 percent of Australian respondents believed that other functions recognized the important role that risk plays in achieving positive business outcomes, and 80 percent said they had a close working relationship with the finance function.

Globally, 73 percent of respondents whose risk functions use machine learning are satisfied with their progress over the past two years in preparing their business for volatile future scenarios, compared to only 45 percent of global respondents whose functions do not use machine learning or advanced analytics.

While nearly all risk functions have begun using RPA to automate routine tasks, only 41 percent of respondents said they are applying advanced analytics and predictive modeling to their data sets, with 3 percent applying machine learning or AI.

According to the report, the lack of adoption is a missed opportunity for risk functions, given the enormous potential of these technologies to mitigate risk and improve productivity.

“New and emerging technologies such as machine learning, advanced analytics and artificial intelligence are being introduced to help manage this data and mitigate these risks; however, the success of these technologies will require Australian compliance leaders to upskill, build and articulate the desired outcomes,” Mr Lopez said.

“Automating certain compliance tasks can allow compliance professionals to focus on risk behavior and culture, ensuring that yesterday's mistakes are not repeated.

"The stakes have never been higher, and the ongoing recovery programs are stark reminders of the consequences of failing to comply and monitor risk."

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting mainly on banking, financial services and wealth.

Prior to joining the team in 2018, Sarah worked in commercial media and produced stories for a current affairs program on public radio.

You can contact her at [email protected].