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Agile, responsive and protected

Changing the game in risk management through technology

Deloitte maintains its strength in risk and compliance management by having a dedicated risk and financial advisory practice. Leaders from that group discuss how they have harnessed the power of technology in areas such as Accounting Information ScienceTM, treasury management, cyber and commodity management.

Leading disruptive technology advances such as machine learning and robotic process automation are being utilised to help improve risk management, lower the cost of compliance and free up valuable human resources to enable the kinetic enterprise.

Evolution of Treasury

Though generally considered tacticians, the perception of Treasury and treasurers is changing. With the evolution of disruptive technologies, treasurers can go beyond treasury management solutions to optimise efficiency and effectiveness of their functions while serving as strategic advisors to the CFO and the business.

As Kesavan Thuppill, managing director at Deloitte & Touche LLP, sees it, by leveraging disruptive technologies, Treasury is providing a whole new scope of value to the broader finance organisation. He cites account compliance, liquidity and working capital analytics and structure, market, credit and payments risk as a few examples of its evolving role.

Kevin Heckel, managing director at Deloitte & Touche LLP, adds that given the pace of technology changes, cyber risk is where an organisation must stay agile, kinetic and able to evolve. This is particularly true since the focus, which was once on lowering the cost of risk compliance, has shifted to deploying emerging technology to identify, learn from and flag anomalies, and free up talent. “Not only are you lowering your cost to identify those, making it more reliable but you're also able to do more, adopt more and stay more agile because you have more ability within your human resources.”

Contextualising risk, taking action

The conflation of cloud, ERP, interconnectivity and internet of everything has meant an increase in cyber threats, which challenge us to think differently about security and risk. And while disruptive technologies enable companies to stay one step ahead, they also allow risk to be contextualised: Where in the organisation is it happening? How? Is it a vendor, a third party, or an employee? Agile-built companies are best positioned to seize on that potential.

And seize it quickly – a capability that raises a valid concern for some. Tian Hwang, a senior manager at Deloitte & Touche LLP, says IT leaders concerned that agility exposes vulnerabilities can think differently there, too. Agility and speed can be synonymous with ‘safe,’ and in volatile economies companies can exploit data lakes with new technologies “in ways that a human simply can’t do, but it is up to the human to take that information, trust it and take action.”

And while having a data lake and the ability to draw from it is to be celebrated, Ryan McWhorter, principal at Deloitte & Touche LLP, submits it’s not ‘data for data sake.’ The leading practice for finance is to begin with the end in mind. “Ask: What accounting and financial information is needed to make decisions? How do we make sure that we've got data structured and governed? Then have a risk management programme around that data lake to support those business decisions.”

Proactive, future-minded transformation

Antiquated, end-of-life systems and a dearth of talent to manage them; government compliance; cumbersome, laborious reporting. All are good reasons to implement an ERP, Hwang points out, but all are responding to pressures and reacting to the ‘now.’ The current shift is towards proactively building kinetic enterprises with disruptive technologies that anticipate initiatives or problems. McWhorter agrees, “Rather than ‘how should I use these’, leaders should be thinking, ‘we need to solve this business issue’ and then finding the technology that can support that resolution.”

Heckel offers up the retail industry – the move to online shopping – as a perfect reactive-versus-proactive cautionary tale. “The technology adopters are moving well beyond and the big box stores continue to announce closures.”

Trusting data, unlocking technology

While accounting and finance are a projection of business activity, AI and algorithms within ERPs are examining historical data and reporting what might happen – a rendering of accounting and financial information. Being able to trust that data as accurate enough on which to base key decisions is another matter and McWorter sees that a journey many companies are currently on. “All the AI capabilities are there and it's about risk management, trust, controls and governance. Those are really the keys to unlocking the technology versus the technology itself.”

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