Audit Committee Institute: Risk Reimagined...risk reimagined; risk and technology; risk challenges...
Transcript of Audit Committee Institute: Risk Reimagined...risk reimagined; risk and technology; risk challenges...
Risk Reimagined
Audit Committee Institute
March 2019
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Document Classification: KPMG Confidential
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Risk Reimagined Globally connected, leveraging single source data, applied machine learning and predictive analysis to make better business (risk) decisions.
We will discuss the evolution of risk management, consider lessons from the past, through to dealing with the challenges and opportunities risk and technology brings for tomorrow.
Through applied risk appetites addressing the values and behaviours, to instil risk aware cultures that form the foundations of sustainable and consumer focused businesses.
Embedded risk focus across the organisational structure, risk at the front line in core decision making - to deliver truly integrated opportunity and risk management
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
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Document Classification: KPMG Confidential
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Organisations focused on relatively short term capital market reporting requirements
Limited availability and access to data and information
Risk management has evolved from - intuitive in making business decisions, to a large and growing practice and profession in its own right
Risk management has become more and more separated from what used to be considered the front line executives responsibility
The last 30 years
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4© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Document Classification: KPMG Confidential
"Too often the answer seems to be greed — the pursuit of short-term profit at the expense of basic standards of honesty.“ – Interim Report
In almost every case, the conduct in issue was driven not only by the relevant entity's pursuit of profit but also by individuals' pursuit of gain, whether in the form of remuneration for the individual or profit for the individual's business. Providing a service to customers was relegated to second place. – Final Report
“Failings of organisational culture, governance arrangements and remuneration systems lie at the heart of much of the misconduct examined in this commission.” – Final Report
Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
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Document Classification: KPMG Confidential
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Second line risk functions, of varying maturity and connection to organisational business activity
Public pressure for increasing regulation and oversight to protect consumers
Leaders challenging the balance between regulation and oversight vs innovation and business growth
Vast amounts of data being created and available, but organisations are failing to interpret
Where are we now
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
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Document Classification: KPMG Confidential
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Corporate values and behaviours need to shift organisational culture to deliver longer term sustainable strategies through an understood risk return relationship - appetite
Understanding the end customer and building shared trust through data interpretation and risk informed decisions
How does technology advancement and the increasing use of A.I and machine learning impact and shape corporate culture?
Corporate Culture
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
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Document Classification: KPMG Confidential
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
A robust risk appetite statement will help operationalise the desired risk culture and shift organisations into a more sustainable operating environment.
Connecting the corporate strategy, narrative and purpose with the community and public expectations
Moving from “pursuit of short-term profit” to longer term sustainability
Risk Appetite
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
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Document Classification: KPMG Confidential
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Digital transformation and the 21st Century Enterprise
Infrastructure
Data
Smart Engines
Interface / Appl ications
Workforce of the Future
Everything as a Service
Customer Engagement
Changing Nature & Value of Assets
Mobile Voice AR/VR 3D PrintingDrones Bots Smart Devices/ Sensors
AI Insight Engines Analytics
Cloud APIs Blockchain
Suppliers, Partners
Employee, Contractors, BotsCustomer Internal,
Operations
Source: SAE Analysisare ready for radical organization transformation
Source: 2018 KPMG CEO survey
of Global CEOs 71%
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
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Document Classification: KPMG Confidential
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
“Rates of adoption of intelligent automation with all industry verticals and business functions jumping on the bandwagon are at an unprecedented level. Companies will need to evaluate desired business outcomes, level of financial investment and complexity of task/process to help determine which classes of intelligent automation addresses their needs while understanding the risk implications of automation.”
“IoT offers tremendous opportunities to automate
processes and increase intelligence beyond expanded
reach and efficiencies. Identifying where the risks are
coming from and understanding how to manage that risk will have an immense impact on how successful the
adoption of IoT will be in our rapidly emerging new world of
connectivity.”
Intelligent Automation Connected Devices
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
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Document Classification: KPMG Confidential
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
We see a need for the convergence of risk, technology and finance into front line decisions?
What will happen to the traditional second line risk functions with the move to integrated GRC solutions?
Will the shareholder and the end consumer ultimately be better off?
Convergence of Finance, Risk & Technology
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
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Document Classification: KPMG Confidential
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
The ability to interpret data and information to make better informed risk decisions”
1* LogicMonitor’s Cloud Vision 2020: The Future of the Cloud Study
83% of enterprise workloads will be
in the Cloud by 20201
Convergence of risk finance and IT – IT’s move from back office shared service to front line service delivery
Risk management fundamentals will be delivered though augmented intelligence and predictive analytics
Technology enabled
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
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Document Classification: KPMG Confidential
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Cognitive expertadvisors
Quantum computing
Smart dust
Machine learning
Digital twin
Virtual assistants
Conversational user interfaces
Smart robots
Drones
Autonomous vehicles
Artificial General Intelligence
Augmented Data Discovery
Neuromorphic hardware
Blockchain
IoT platform
Software defined security
Edge computing
5G
Smartcity
Serverless PaaS
Augmented reality
Human augmentation
Volumetric displays
4D printing
Connected home
Nanotubeelectronics
Virtual reality
Brain Computer Interface
Cognitive computing
3D printing
Artificial intelligence
Impact
Transformational
High
Moderate
Immersive experience, AI & Digital platforms
Digital platforms
Immersive experience
Emerging technology radar
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
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Document Classification: KPMG Confidential
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
1 - KPMG Technology Innovation & Business Transformation Surveys
2 - KPMG U.S. CEO Outlook 2017 3 - KPMG The changing landscape of disruptive technologies 2017
Regulatory environment has not kept pace with technology
deployment.
5 of the top 7 barriers of technology
adoption are from Risk.1
35% of companies cite
risk management as top barrier to commercialising
tech.3
Continued adoption of emerging
technology, no IT risk
measurement.
93%of companies are
in some phase of changing their business model.1
65% see technology disruption as
opportunity, not a threat.2
Emerging Technology risk
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
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Document Classification: KPMG Confidential
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
ContactsRisk, Strategy & TechnologyKevin Smout, PartnerTel: +61 401 991 [email protected]
Data and Analytics Zoe Willis, PartnerTel: +61 2 9335 [email protected]
Risk CultureJo Bowles, DirectorTel: +61 2 9335 [email protected]
Compliance and RegulationJacinta Munro, PartnerTel: +61 3 9288 [email protected]
Risk and Emerging Technology Anu Kukar, DirectorTel: +61 2 9346 5462 [email protected]
National Head of Risk, Strategy and TechnologyAdrian Fisk, PartnerTel: +61 2 9335 7923 [email protected]
Risk, Strategy & TechnologyAnthony Donohoe, PartnerTel: +61 3 8626 [email protected]
Risk, Strategy & TechnologyPeter Beaton, PartnerTel: +61 7 3233 [email protected]
© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
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© 2019 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Liability limited by a scheme approved under Professional Standards Legislation.
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