AI to Transform Risk Management Technology in 2024

The year 2024 marks a pivotal juncture in the realm of risk management information systems (RMIS), as the transformative power of technology, particularly generative artificial intelligence (GenAI), takes center stage, according to Redhand Advisors.

As organizations grapple with increasingly complex risk landscapes, the convergence of cutting-edge AI technologies with risk management practices has emerged as a catalyst for change.

According to this year’s RMIS Report, based on an annual survey of nearly 1,000 risk professionals, the expected change in annual expenditure on risk management technology has increased by 10.5% on average compared to the previous year. This increased investment underscores the growing recognition among organizations, regardless of size, of the crucial role that advanced RiskTech solutions play in navigating contemporary risk challenges.

The report reveals that 74% of users anticipate increases in expenditure, with AI tools gaining prominence as a defining trend. While currently only 10% of risk professionals report utilizing GenAI, 48% anticipate adoption within the next three years. That is all the more notable given that 54% of respondents said they currently have no exposure to GenAI tools at work.

“The integration of advanced technologies like GenAI in the insurance sector, which traditionally has been reliant on human expertise and manual processes, presents an unprecedented opportunity for transformation,” said Patrick O’Neill, founder and president of Redhand Advisors. “With approximately 80% of claim data existing in unstructured formats such as emails, documents and phone calls, the potential for GenAI to revolutionize the claims process is immense.”

Despite the promising prospects for AI, challenges and barriers to adoption persist from the user’s perspective. Security and privacy concerns rank high, as cited by 42% of respondents, followed by the challenge of understanding AI capabilities and limitations, reported by 35%. Other impediments encompass issues related to quality and reliability, complexity, data privacy, fraud risk, bias and integration.

Another notable trend is the faster adoption rate of RMIS among mid-market and small enterprises in the past three years. “In the past three years, 37% of smaller organizations (those with $500 million or less in revenue), adopted a RMIS, compared to 26% in the previous three years, signaling a shift in the market dynamic toward smaller entities,” O’Neill states.

From the vendor perspective, increased accessibility and adaptability take center stage in their product roadmaps. Vendors are focusing on enhancing usability, simplifying interfaces, and developing intuitive dashboards that provide actionable insights, the Redhand report finds. Workflow optimization and robotic process automation (RPA) are also gaining traction, with vendors integrating self-service functionalities to streamline processes and enhance efficiency.

As the integration of GenAI into RMIS and RiskTech solutions progresses, vendors are placing emphasis on secure and ethical AI practices. O’Neill highlights, “There is also a growing emphasis on secure and ethical AI practices, ensuring transparent data handling and user consent to uphold trust and integrity in AI applications.”

The 2024 RMIS Report paints a picture of a dynamic landscape where innovation and the democratization of RiskTech empower organizations of all sizes to navigate evolving risk dynamics effectively.

As O’Neill concludes, “Embracing these trends not only enhances operational resilience but also fosters a culture of proactive risk management, empowering organizations to thrive in an era of evolving risk dynamics.”

To obtain the full report, including RMIS vendor profiles, visit Redhand Advisors website. &