Over the past two decades, risk management has gone through several distinct phases in response to changing business conditions and regulatory requirements. Slower economic growth and declining margins have placed a premium on increasing the efficiency and reducing the cost of risk management. Financial services sectors will be facing changes in not only the way that their products and services are regulated, but in the ways that these are delivered to customers and how the value of a customer over their lifetime is managed.

The role of the risk management function will also become clear — oversight and challenge. The risk function itself will be streamlined and much slimmer with a rationalised risk infrastructure that uses location and delivery models for cost optimization and leverages the power of digital for both efficiency and effectiveness. Big data analytics and artificial intelligence will help organisations mine their data for actionable intelligence to identify risk, including extreme but plausible events that could spark contagion or create systemic shocks.