Can AI replace Risk Management?

Artificial Intelligence (AI) is a rapidly developing fact of life that will affect many aspects of a business. This article considers just one key aspect – risk management and asks is AI (as some have suggested) a panacea for risk management?

Risk management is the ‘effect of uncertainty on objectives’. This ISO 31000 definition is at the core of the challenge. Objectives will be different for any initiative be it a Strategic Plan, Change Management Initiative, or Project (of which there are many different types eg infrastructure, IT etc). Each will have different objectives and hence be unique.

Let’s reduce these differences and consider similar projects such as two small substations. Technically there will be many similarities. Indeed, they will probably have identical equipment in them. However, that is probably where the similarities stop. The substations will be in different geographic locations which will drive different access, foundations and physical security requirements. If it is a brownfield site interfaces will be more complex than a greenfield site. Stakeholders will be different. External stakeholders are likely to be different councils, internal will also certainly be a different team (may be small or large differences here). I needn’t go on.

The point is that each project has many unique variables. Each of these variables comes with its own set of unique risks.

AI uses past data – the more the better – and then using this for future endeavours. The potential for AI is diverse; re-writing/reviewing documents, machine learning, review of mammograms for early cancer prediction are all huge potential improvements to the way we have worked in the past. Although these are three diverse examples they have a similar process, they use large amounts of data to focus on addressing a single problem.

Turning back to the substation example if there was sufficient relevant data the outcomes of a project could be forecast. But is that going to help manage the current project? Other than managing expectations the answer to that is probably no. We still need human input to identify risks and mitigation measures that are specific to our project. Indeed, AI could introduce risks by lulling us into a false sense of security with risk management being neglected.

So how can AI help risk management? After holding a risk identification workshop, it could be used to check if any risks have been missed. Similarly, a check of mitigation measures could also be undertaken.

Conclusion: AI can help inform but not replace risk management.