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AI and the Future of Risk Management

artificial intelligence robot ai courtesy of Learn.org

Artificial Intelligence (AI) and other disruptive technologies such as the Internet of Things (IOT) present significant challenges for risk practitioners and those responsible for organizational governance. AI and IOT are driving technology innovation at unprecedented levels. The rate of change as well as the degree of change are occurring faster that we have ever seen before.

The dramatic rate of change is best illustrated by Buckminster Fuller’s knowledge doubling curve. Buckminster Fuller was an American futurist, prominent author, and university professor.  Fuller developed the knowledge doubling curve in the 1980s to illustrate how the collective knowledge of humankind was changing. Knowledge is defined as information and skills acquired through experience or education and Fuller’s knowledge doubling curve is intended to measure the knowledge rate of change in the modern world. Fuller determined that knowledge doubled every century until 1900.

The beginning of the 20th century saw a significant increase in the knowledge doubling rate.  By the end of World War II, knowledge was doubling every 25 years. Industry experts now suggest that knowledge doubles every one to two years. With the proliferation of disruptive technologies like IOT and AI, IBM estimates that knowledge will double every 12 hours by the end of this decade. In December 2017, Google's DeepMind AI mastered 1,500 years of years of chess tactics and strategy in a mere four hours.  This is equivalent to transporting someone from the 6th Century to present day and asking for their assistance to combat malware and ransomware attacks.  In the 6th Century the technologic innovation of the day is the spinning wheel, the horse is the fastest mode of travel, and the printing press is still 400 years in the future.  There is nothing in our society today that even remotely resembles 6th Century society. We can only imagine how challenging if would be for someone to function in this situation yet this degree of change may become commonplace in the immediate future.

AI and IOT have the potential to iterate through thousands of years of technology innovation literally overnight.  This exponential technological innovation may give birth to new materials and new devices that humans don't have the capacity to understand much less operate. On one hand this tremendous rate of change can be somewhat scary but on the other hand, this dramatic rate of change represents incredible opportunity for organizations that are poised to manage the risk and opportunity that comes with unprecedented change. Organizational resiliency, risk-aware culture, and offensive risk management are critical elements for successful organizations of the future. My new writing project presents bimodal risk management as the future of risk management.  Bimodal risk management enables organizational resiliency and helps organizations capitalize on the tremendous opportunity presented by disruptive technologies.

 

 

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