Risk Management Automation

Automation has streamlined the processes of financial industries, making it efficient for the end-user. Automation and robotics have revolutionized how businesses operate. Risk Management Process Automation is also known as the robotic risk management process. It is a specific field of applied automation and machin..

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What is Risk Management Process Automation?

Risk Management Process Automation (RMPA) is also known as the Robotic Risk Management Process (RRMP). Machine learning and robotics are utilized to handle the risk and compliance functions of organizations and enterprises. By having RPMA, industries, and commercial organizations would reduce the human intervention process in handling risk functions.

Data has shown that the use of human resources in compliance and risk management processes has increased the number of errors. These errors would be susceptible to large data breaches, which will directly affect the organization’s reputation. Due to this, organizations use the Robotic Risk Management process to reduce the amount of compliance risk.

Overview of Robotics Risk Management Industry 

Before globalization, organizations around the world were handling risk and compliance through the use of excel spreadsheets and paper-based database. These models of handling risk were classified as End User Computing (EUC). EUC used extensive human resource functions at completing works. The human mind is prone to conduct errors when it comes to the handling of risk and compliance. Traditional Models such as EUC showed more amount of human errors and mistakes caused by data management.

Financial firms that predominantly used the system of Macros found that there were consecutive errors in the administration system. To avoid these errors, innovative methods were introduced to reduce the number of human intervention processes in handling compliance and risk management functions. The chances of increasing fraud are more when a company does not have an efficient risk management department.

However, frauds do occur in companies that have departments that help to handle and mitigate risks. Some enterprises have Compliance departments headed by the Chief Compliance Officer (CCO). The CCO and his team have to co-ordinate with other departments to reduce the ability for fraud to occur. By authorizing risk management function to robots and machine learning software, the probability of fraud in an organization can reduce.

Organizations use these technologies as a competitive advantage to reduce the amount of risk and compliance. 

Problems with Traditional Risk Management Models 

Problems with Traditional Risk Management
  • Human Intervention

Humans are considered as assets of an organization. Workforces around the world contribute to the progress of an organization. Organizations utilize human resource functions to reduce the amount of risk and compliance required.  For example- A bank has to report periodic compliances to relevant authorities. The bank can use human resources functions to carry out this process. However, human intervention can cause faults and errors in the system related to reporting. Individuals in this department can even forget to report compliance. To avoid this, some banks use Risk management process automation to reduce the amount of human intervention.

  • Human Error

An overworked machine is susceptible to making faults. Similarly, employees who are overworked or conduct monotonous tasks are more likely to make errors in the flow process. Using Robotic Risk Management Processes in companies will reduce the amount of human error in systems. For example- A company can use databases and spreadsheets to report matters. However, using this requires an admin or a manager to control the systems. Using Robotics would reduce the number of mistakes and errors caused by human intervention.

  • Inefficient Co-ordination

There is a lack of coordination between humans in an organization. This makes it harder for an organization to achieve all its goals and objectives. For example - an Organization receives messages from the customer. These messages would be received by the IT support or customer department. All sequences present in the message have to be categorized based on the issue faced by the customer. Based on this sequence, the back end support team will forward the customer's message to another department. Sometimes, due to improper coordination between the groups, customers' responses can be forwarded to the wrong departments, which will cause unnecessary waste of time and energy. This can be avoided by using Risk management Process Automation Systems.

  • Lack of Optimization of Resources

IT software such as AI, Big Data, and machine learning can respond to issues faster. This cannot be carried out by individuals at a quick pace compared to robotics. Organizations can use this advantage to improve their capabilities. 

Scope of Risk Management Process Automation 

Risk Management Process Automation can be carried out for the following reason:

  • Using such processes will reduce the amount of human intervention in systems.
  • RMPA will improve the chances of reducing the amount of fraud present in an organization.
  • The organization can achieve optimum efficiency by using such processes.
  • Risks can be mitigated by using software such as machine learning and robotics.
  • Businesses around the world are embracing changes in the way they work. By utilizing such technology advances, they would effectively increase compliance and risk management processes.
  • Regulatory bodies are prone to make legislation for machine learning and robotics. For example- the Insurance Regulatory and Development Authority of India (IRDAI) has brought out draft regulations for insurance for drones. Similarly, regulatory bodies will accept this technology as a new normal. 

Use of Risk Management Process Automation 

Robotic Risk Management processes can be used for the following:

Robotic Risk Management
  • Regulatory and Compliance Reporting

Many enterprises may or may not have a compliance department. Even if organizations do have a compliance department, many issues such as non-compliance are faced. Example- A bank or a financial institution would have to submit the quality of assets report and the loan report annually or monthly. Regulatory and compliance reporting takes a lot of time and involves a lot of manual labour. By using advanced robotics, banks would be able to efficiently collect data and prepare monthly reporting compliances on time.  Apart from this, the use of robotics would also submit accurate information to concerned authorities. Using this, financial institutions and banks can carry out reporting within the prescribed time and avoid any form of infringements.

This reporting will help the Chief Compliance Officer and the Chief Coordinating Officer of the company to report all compliances. 

  • Stocks and Trade Surveillance

Advanced robotics are also used in stocks and trade surveillance. Stock trading companies use artificial intelligence and advanced machine learning data to determine the compliances required to trade stocks. Apart from this, compliance checks have to be conducted to post these trades. The manual process of human intervention would take hours to report. Surveying such stocks would also be a potential problem. Companies using this software would optimize their resources. When an organization uses chatbots on its webpage, robotics and artificial intelligence are used to chat with potential users. The use of AI and robotics guide consumers and put them across to the correct department. This compliance will help financial officers and other officers present at the board level. 

  • Testing and Management of Compliance in an Organization

CCO is recruited with the primary function to handle compliance-based functions in an organization. A Chief compliance officer can appoint a team of trained professionals to handle managing and testing of compliances in an organization. This would be a time-consuming process. Instead, the organization can utilize risk management process automation to compile a checklist of compliance management carried out by the firm. The robotics process not only compiles a checklist but also makes the reporting of data of compliances carried out by the organization. As a result of this, continuous testing is capable by the company.

An enterprise can work on their risk analysis strategy by using such software. Apart from these, companies can efficiently manage data using this model.

  • Credit Loss Computation Process

As per the Indian Accounting Standards (Ind AS), banks have to compute information on the expected credit loss. Apart from this, the information present in the financial statements must also be computed by the bank. Through human intervention, the process of computation of such information becomes hard. Moreover, the amount of risk in an organization is more through this process.

By using this software, data is extracted from the amount of financial information present with the bank. Through the use of AI and Bots, this information is collected, and the amount of expected credit loss is calculated and reported. By using such a process, a financial organization or bank can achieve integration of monitoring and compliance-related work. 

Risk Management Process Automation Strategy

Businesses want to have a competitive edge in the market. This competitive edge is the driving factor that helps the IT department of an enterprise to grow and develop. The use of robotics and AI helps companies to reach different potentials. Organizations around the world utilize the strategy to develop robotic automation processes. Apart from this, organizations are also developing models that help them to mentor and monitor Robotic automation process systems. This model is known as the Centre of Excellence Model (CoE). The main strategy followed by an organization:


This will comprise of the following:

  • Does the model support the organization's workforce?
  • Has the workforce come out with alternatives to the operation of this model?
  • Are the standards met for the operation of the above model?
  • Apart from this, the governance strategy which is involved will include the management support and the director’s support for the use of robotics.
  • Whether the risk management strategy has been adopted and implemented by all employees?
  • What is the main vision of the organization in choosing the above model?

Life Cycle

  • How dependent are the directors and shareholders on the model? Whether the model has been implemented throughout the organization?
  • What are the main criteria in choosing the below model?

Measurement of Optimum Value

  • This would be more dependent on the value gained from the model.
  • Strategies such as quality assessment would be used here to monitor performance. The standards of performance can be measured and compared to the actual standards of performance.
  • One of the main points here is to determine the advantage of the method utilized.

Aligning the Value and requirement of Implementation

  • This would include conducting frequent training to employees and understanding the system of COE.
  • This would include if robotics is beneficial to an organization.

Disruptive Technology

  • The use of robotics is disruptive to traditional processes of risk management.
  • Will it be embraced in all areas of the organization?
  • How will it affect the future business plans of the company?

Integration within an Organization

  • The last step in developing a strategy is effective implementation.
  • Without effective implementation, automation would not be able to serve its purpose.

Enterslice Advantage

  • Enterslice helps in developing technologies (bots) to lower the overall compliance costs of your organization. Through this process, your organization can improve the risk function of its effective departments.
  • We embrace technology and development.
  • Experts at Enterslice have conducted risk management services with the primary objective of adding value to your organization.
  • We have multifaceted teams of professionals comprising of IT professionals, lawyers, and Risk Management Advisors.

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Frequently Asked Questions

Automation is the use of digitized technologies and robotics in the risk management process. Using automation improves the efficiency of the risk management process.

Advantages of risk management process automation are as follows:

• Lesser human interaction which directly reduces the chances of human errors.

• Reduces the cost of compliance for a company.

• Increases the risk factor in the company.

The following are the disadvantages of robotic risk management process:

• Lack of regulation.

• Traditional Mindset of Individuals Accepting this method in an organization.

Chatbots are used by an organization to answer any related queries on a website. These queries are linked to sequences that use the Application Programming Interface (APIs) to connect to other websites.

The time frame for implementing RPMA throughout an organization would depend on the organization's size. Apart from this, it is the primary role of the IT team of the company to implement the framework throughout the organization.

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