PwC report highlights concerns despite gen AI opportunity

Cyber and digital technology risks are a key concern for businesses and risk leaders in 2023, even as 60% see generative AI as an opportunity for their businesses, according to research conducted by PwC. 

The 2023 Global Risk Survey, which surveyed more than 3,900 business and risk leaders, found that while 39% of respondents feel “highly” or “extremely” exposed to inflationary risks, cyber and digital technology risks are top concerns, at 37%, and 32%, respectively.

The survey also finds that as businesses look to new and emerging technologies such as generative AI, machine learning, automation, cybersecurity and the cloud to unlock value and transform their operations, it is also playing a significant role in shaping that organisation’s exposure to risk. 

“In a world that is persistently in a state of flux, it is clear that organisations need to transform, with new and emerging technologies playing a critical role in that transformation,” said Sam Samaratunga, Global and UK Head of Risk Services at PwC UK. “So it is no surprise that cyber and digital risks are top-of-mind in 2023, with those leaders responsible for managing risk ranking cyber higher than inflation. 

“However, the survey highlights that if organisations don’t take risks, they will not progress. So if organisations are to grow, build resilience, and see sustained, long-term outcomes, they should follow the lead of ‘Risk Pioneers’ - organisations with a proactive approach to risk, an enterprise-wide risk strategy, and strong alignment on risk appetite between teams.”

Gen AI is viewed as an opportunity, but is also triggering risk reviews 

Technological change is shifting the risk agenda inside businesses, with 57% of respondents noting that preparing for technology investments, from cloud to emerging technologies such as gen AI, is the single biggest trigger for an organisation to review its risk landscape. This is higher than organisations which are triggered into a review by a risk event (50%) or entering new markets (46%). Technology disruptors, those that are more focused on value creation than value protection, are also much more likely to be seen as opportunities, rather than risks, compared to other external non-tech disruptors. For example, 60% see gen AI as an opportunity, compared to just 35% who see changes in regulation, or 28% who see supply chain disruption as an opportunity. 

Closing the skills gap

While there is a clear ambition among most organisations to take a more tech-powered approach to risk, there is a clear gap in capabilities and execution: just 10% are already using advanced and predictive analytics, cutting-edge tech and data for managing risk and are continuously refining and innovating. Furthermore, many sit at the initial and developing stages of tech/data maturity, with just 14% exploring or having just started using technology and data for risk management, whereas less than one-quarter (24%) are using basic technology and data tools for risk management or have established technology and data procedures for risk management.

“The age of the benign risk environment is over for the foreseeable future, amplified by the increasing pace and impact of technology change,” comments Simon Perry, Markets & Services Leader - Risk at PwC UK. “These threats mean taking risk intelligently – powered by technology and framed by growth and opportunity – is now critical to adapting and reinventing yourself in this constantly changing world to both protect and create value.”

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