Digital Transformations

FinTech and Artificial Intelligence (AI) based solutions are a growing part of our world.  Established businesses must move with the times or risk being behind their competitors or new players.

A digital transformation is the common way to bring this FinTech revolution into existing financial services and insurance businesses.  There are various types of digital transformations – bottom-up data-driven, enhancing customer journeys, IT-enabler and the ‘tech’ subsidiary or venture. 

Regardless of how the transformation is approached, it will lead to wider impacts than just a technology upgrade, e.g. new tools, typically data intensive and different ways of working, which create challenges around governance and risk management.  The scale of these challenges generates concerns that digital transformations are not as deep and as extensive as they should be, though Covid-19 might well change this.  So, the business case for looking at the interaction between digital transformation and governance and risk management is a strong one.

Digital transformations project delivery is highly complex.  Companies must focus on managing risk whilst continuing to meet all responsibilities and obligations to their customers.  However, these challenges are not new and risk functions have developed tools and approaches to manage business transformation risks.  From a risk management perspective, the real challenge with digital transformation is associated with the BAU operations in a digital world.

While the issues will be business specific, it is possible to paint a general picture.  The risk profile of the business might change in different ways and faster than in the past where AI tools can make decisions.  This creates complexities around the operating model which impacts the control environment.   More generally, the perspective of model risk should not be overlooked as in this case.

Crescendo Advisors works extensively with established companies to provide guidance and advice on how to create the necessary risk management frameworks and governance to support digital transformations.

Specifically, Crescendo can provide consultancy in the following areas:

1.  using risk management and governance as an enabler for digital transformation; this will not change the challenge of transformation but will equip your risk function to support transformations, ensuring the environment is optimised and ready to deal with challenges (initial thoughts here);

2.  considering the potential BAU impact of a specific digital transformation on the risk and control environment and any changes needed to maintain its adequacy (a high-level example).

If you would like to talk to us about how we can provide our experience and expertise to support your digital transformation, call us today on 07766 725315 or email