5 risk management capabilities that reduce complexity and foster trust

Current uncertainty and challenges call for a dramatic rethink of the way risk is managed. KPMG helps organizations modernize and optimize their approach.

The long-term payoff of inspiring trust is significant

Insight
Future of risk
Building a trusted risk function to succeed in a riskier world

Facing compounding risks, increasing regulation, widespread volatility, and an accelerating pace of change and disruption, leading companies recognize that trust is the ultimate business enabler. Growth, performance, efficiency and innovation are all fueled and facilitated by the trust that customers, employees, partners, investors, regulators and communities have in your enterprise. Having stakeholder trust gives organizations the freedom and flexibility to change speed and direction to seize opportunities as they emerge.

But before businesses can drive value from trust, most need to invest in modernizing how they manage risk and compliance to become more productive and effective. According to the KPMG Future of Risk survey, 90 percent of senior executives say the pace of risk transformation activity has increased over the past year.

At KPMG, we’ve been part of this momentum to elevate how organizations manage their diverse and complex risk environment. We’ve helped plan, develop and embed enhanced capabilities across many client risk operations, from the risk function itself, to compliance and legal, to technology risk and cyber teams, to internal audit. And we know first-hand why nearly all business leaders are putting more time, money and resources toward increasing quality of and confidence in risk-related activities. Like us, they understand that just as trust enables the business, so does dynamic, proactive and technology-enabled risk management enable trust.

Focus your risk modernization efforts on 5 key areas

The insight related to large-scale risk transformation activities revealed in our research and our own work raises the question: What risk management capabilities deliver the greatest impact in building a trusted organization?

As market-leading advisors to risk organizations of all kinds, we know first-hand that risk transformation can be complex, costly, and sometimes prone to failure. We also know that understanding where to focus your resources and efforts makes all the difference.

Based on our experience with clients and research published in our Future of Risk report, the following 5 key investment areas stand out for their ability to strengthen stakeholder trust in your business today and harness its power tomorrow.

1. Advanced data and analytics

Leading-edge data and analytics capabilities are powerful tools for risk and compliance functions, supporting better risk identification and decision-making, which in turn increases trust. In our survey, 67 percent of senior executives say risk data brings an increased understanding of potential risks and their impact on the organization. 

2. AI and ML

Artificial intelligence (AI), including generative artificial intelligence (GenAI) and machine learning (ML), are critical digital tools for organizations to adopt. As risk levels rise, deploying these innovations across risk and compliance operations can help accelerate and improve risk identification, monitoring and mitigation. In our survey, AI and GenAI are by far the most popular type of technologies for managing additional risk responsibilities in the next three to five years. For example, a European bank is rolling out GenAI tools to help identify reporting gaps and respond to different regulatory assessments, making its manual processes faster and less resource heavy.

3. Cybersecurity

Using leading technology to enhance and modernize business operations is table stakes, including in the risk department. Yet the greater use of technology throughout the enterprise increases cyber risk. Our survey finds that the #1 focus of risk managers in the next one to three years will be proactively adapting to new risk types, including cyber risk. To achieve this, we expect to see many risk leaders prioritizing the modernization and optimization of cybersecurity measures to safeguard against potential threats and vulnerabilities. 

4. Technology-driven risk management

Automation. Cloud. Data. Analytics. AI. Integrating digital technologies into risk operations is the key to enhancing both efficiency and effectiveness. Nearly all survey respondents (98 percent) say digital acceleration has improved their organization’s approach to risk. The impact of technology-driven risk management is so evident and widespread that it will continue to be top investment area. Forty-one percent expect to spend more than half of their risk management budget on technology in the next 12 months compared with just 28 percent in the previous year. For example, a major financial firm that faced risks due to utilizing legacy data implemented a new digital infrastructure that agilely embedded and automated compliance obligations, helping provide a more individualized customer experience and reducing risk even as the company added new products and markets. 

5. Digital literacy

The specialized skills and knowledge required for delivering risk services effectively and efficiently are continuously expanding. With data and technology at the heart of efforts to improve risk preparation, management and efficiency, risk professionals must be increasingly well-versed in technical areas, like data analysis, and understand how to use modern tools and solutions. Business leaders in our survey are looking for risk professionals with interdisciplinary skills, especially in technology, innovation and industry-specific expertise. The top 3 areas where they plan to supplement their risk management teams with expertise are IT risk, predictive modeling and cybersecurity skills. Case in point: After implementing a new technology, one organization completely reassessed and refreshed its technology risk service offering, including developing new learning pathways to address skill gaps.

How KPMG can help

Learn more about the importance of stakeholder trust as the ultimate business enabler.

At KPMG, we help clients enhance stakeholder trust by transforming risk management into an opportunity enabler that generates enterprise value and creates competitive advantage, ultimately positioning your business for responsible growth, bold innovation and optimal performance. 

KPMG Risk Services capabilities

1

Internal audit and enterprise risk

Maintaining trust by consistently providing assurance and taking a holistic approach that covers the full picture of risk in your organization.

2

Governance, risk and compliance

Building stakeholder trust by enabling enterprise users and protecting data and transactions to support a single view of risk.

3

Compliance and legal risk

Helping to identify and manage risk, save money and build trust with stakeholders.

4

Risk, regulatory and compliance

Simplifying complex regulatory change and turning risk and compliance into competitive advantage.

5

Cyber risk

Helping to protect businesses and support their potential to be confident and innovative.

6

Technology risk

Earning stakeholder trust in new technology adoption.

Explore more

Meet the team

Image of Tim Phelps
Tim Phelps
Risk Services Leader, KPMG US
Image of Samantha Gloede
Samantha Gloede
Managing Director, US & Global Trusted Leader, KPMG US

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