Artificial Intelligence's Influence on Risk Management

Abstract

This paper examines the influence of artificial intelligence (AI) on risk management. It is an integral part of the decision-making process, encompassing a variety of activities and measures. However, in recent years, AI has become increasingly important in helping humans make decisions in a risk-aware manner. AI can provide the necessary tools to identify potential risks before they occur, providing ample time to develop contingency plans and optimise existing strategies and processes. AI’s power to identify potential risks rests on its capacity to sift through vast and diverse data sources, recognise abnormal patterns and alert stakeholders before these patterns escalate into critical issues. This transformative capability empowers industries to move from a reactive approach to a proactive one, fundamentally changing how businesses plan, strategise and mitigate risks. Moreover, AI can be used in the development of predictive models to assess possible risks before they can become a reality. Finally, AI can assist with forecasting potential risks in the future. In conclusion, AI has the potential to revolutionise risk management, providing insights and capabilities that would otherwise not be available.

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