AI is revolutionizing

risk management
Transform your risk management strategy
for the future by integrating AI

Risk management isn’t just evolving—it’s being reengineered. Artificial intelligence

(AI), including generative AI (GenAI) and agentic AI, is the engine driving a seismic shift
in how organizations anticipate, assess, and act on risk. The old playbook—manual
processes, backward-looking assessments, and fragmented frameworks—is being
replaced by intelligent systems that learn, adapt, and act in real time. According to
the KPMG Future of Risk Survey, 400 executives rank AI and GenAI as by far the most
popular type of technologies for managing additional risk responsibilities in the next
three to five years.

Risk teams have been using AI, such as automation How can risk functions move beyond incremental
and advanced data analytics tools, for various tasks change and toward transformative reinvention? Let’s
for many years. In fact, 98 percent of respondents unpack the current state of AI maturity, spotlight bold
to the KPMG Future of Risk Survey said that digital use cases, and examine how to move quickly toward
acceleration such as AI and advanced analytics has the AI-powered future of risk.
already improved their approach to risk identification,
monitoring, and mitigation. Looking forward, today’s
risk leaders see massive potential in moving beyond
the basic AI tools at their disposal to take advantage
of the latest AI advancements, including GenAI, to
surface deeper risk insights, automate workflows, and
turbocharge risk managers’ efficiency and productivity.
What separates the leaders from the laggards is
how smartly, and boldly, they embrace and embed
AI advances into their risk operations. Many are
experimenting with “point-in-time” solutions—
automating the edges or single step activities while
leaving the core untouched. But the real opportunity
lies in embedding connected AI solutions across the
risk lifecycle, flipping the pyramid from production-
heavy to decision-driven, and preparing for a future
where agentic AI operates with minimal human
oversight and humans spend more time on analyzing
results, actively managing risk, and strategic
imperatives.

AI is revolutionizing 1
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Why risk leaders feel the heat—and how Manual mayhem to machine mastery:
AI can lower the temperature The state of AI adoption
Risk leaders today are navigating a perfect storm. Despite piecemeal AI adoption, risk management
Regulatory scrutiny remains strong and expectations has long been a labor of spreadsheets, static reports,
continue to elevate. Boards are demanding real-time point-in-time assessments, and human bottlenecks.
data and sharper insights. The volume, velocity, and That era is ending, as risk teams turn to AI more
volatility of risks are accelerating while businesses holistically, allowing them to spend less time
race to innovate. assembling reports and more time managing what
matters, the risk at hand. Credit and fraud risk teams
AI offers a way forward, but only for those willing
have been early adopters, using machine learning for
to move beyond incremental fixes. The most urgent
decades to detect anomalies and automate decisions.
challenge? Balancing speed with safety while
Now, the rest of the risk landscape is catching up.
balancing AI capabilities with deep risk management
expertise and appropriate oversight. Still, most organizations remain stuck in the early
stages of this transformation. Today, the majority
of risk functions operate with siloed, point-in-time
solutions that automate narrow tasks versus complete
risk management workflows. These tools are often
deployed to reduce the burden of highly manual, error-
As organizations race to launch prone processes—like maintaining foundational risk
AI-powered products, they’re hitting data such as process, risk, and control inventories,
monitoring for quality or duplication, and scanning for
a wall of internal friction: new inconsistencies. It’s a start, but it’s not enough.
product approval reviews, model Meaningful opportunities lie ahead for those willing
to lean into AI to help enhance centralization and
risk requirements, and compliance automation across disconnected risk functions, such
hurdles that slow innovation to a crawl. as enterprise risk management (ERM), third-party
risk management (TPRM), regulatory reporting, Anti-
Ironically, AI is both the accelerator and Money Laundering (AML) and other compliance, and
Know Your Customer (KYC) and client onboarding
the constraint. practices. As organizations mature their AI capabilities,
AI becomes more integrated—connecting end-to-
end risk activities and embedding intelligence into
the core of governance, risk, and compliance (GRC)
This duality is reshaping the risk function. AI can systems. This integration not only strengthens second
dramatically reduce costs, automate compliance, and line oversight but also accelerates first line activities
surface hidden insights. But it also introduces new that are traditionally time-consuming, enabling the
risks that demand a new kind of oversight. Risk teams first line to act with greater confidence and agility.
must now manage the risk of AI in and of itself. As a result, organizations can reduce friction, make
faster decisions, and increase speed to market. Next,
The organizations pulling ahead are those that treat agentic AI begins to take over entire workflows,
AI not as a bolt-on, but as a strategic capability. acting autonomously with minimal human oversight.
They’re redesigning their operating models around the And with full AI transformation, the risk function itself
analytical risk management moments that matter and is reimagined—traditional methods are replaced with
using AI automation—with a human-in-the-loop, by AI-native strategies that are faster, more precise, and
design—to speed up and strengthen data analysis and deeply data-driven.
reallocate human capital to higher-value work. They’re
not just using AI—they’re using it well. Importantly,
AI is also leveling the playing field: It offers a powerful
opportunity for smaller organizations to compete with
larger ones by democratizing access to advanced
analytics and decision-making tools that were once
the domain of only the biggest players.

AI is revolutionizing 2
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The five stages of AI maturity in risk management
AI Impacts on Risk Management
Impact increases in risk management as AI capabilities mature, becoming transformative.
Short Term Solutions Future of Risk
AI impact and change in risk management

Stage 1 Stage 2 Stage 3 Stage 4 Stage 5

Prototype Siloed Integrated Agentic Transformative
Organizations Point solutions in Connected solutions End-to-end solutions Fundamental transform-
exploring the use production focused for end-to-end in production focused ation in approaches to the
of automation, on single activities activities within risk on key processes risk framework and
ML, or AI in risk within risk which which are connected within risk which methodologies which
management may or may not be to GRC with human- don’t require human- replace traditional
execution but not in connected to the in-the-loop for key in-the-loop methods used
full production organization’s GRC decisioning today

Maturity of AI capabilities in risk management

AI use cases through the risk Risk mitigation: AI tools support decision-
making around risk response strategies and
management lifecycle automate or optimize mitigation actions.
For instance, they can identify issues and
Yes, AI can clean up control inventories and
root causes, review and design control
flag duplicate risks. But that’s just the start. The
inventories, and monitor alerts more
next frontier? Real-time risk sensing, predictive
efficiently and precisely.
compliance, and AI-driven scenario planning. These
aren’t experiments—they’re competitive advantages. Risk monitoring: AI enables real-time or
AI can deliver transformative value across all stages of continuous monitoring of risk indicators,
the risk management lifecycle, from risk identification producing aggregated reporting and moving
to risk review and reporting. Here are some not- from point-in-time reporting to more
so-obvious use cases your organization can start dynamic, real-time capabilities.
exploring right now: Risk review and reporting: AI improves
Risk identification: AI can generate the efficiency and quality of risk reporting
process flows, detect emerging risks, and by automating the generation of reports,
recommend mappings to risk taxonomies, thematic analysis, and standardized risk and
processes, and controls. This helps control report outputs.
organizations identify risks more accurately Testing and validation: AI can automate
and earlier. control testing activities, validate control
Risk assessment: AI can recommend effectiveness, and detect anomalies across
risk ratings, generate and monitor key risk large data sets. By continuously learning
indicators, and calculate residual risk. By from historical patterns and outcomes,
making risk assessment more probabilistic, AI enhances the accuracy, efficiency,
AI can enhance the precision and and coverage of testing activities—
consistency of risk ratings. reducing manual effort and enabling faster
identification of control weaknesses.

AI is revolutionizing 3
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Getting started: Operationalizing AI in your risk and resilience functions

AI isn’t just a future vision—it’s a present imperative. But embedding it into risk and
resilience functions requires more than a tech upgrade. It demands a strategic shift in
mindset, methods, and muscle. Here’s how to get started:

Pinpoint the pressure points: Start by mapping

the risk management lifecycle. Where is human
effort highest? Where are inconsistencies most
common? Use this heat map to identify the best entry
points for AI—typically in highly manual, repetitive
tasks like control inventory management, issue
identification, or risk scoring. Tip: Ask the critical
question, “Where do we still need humans in the
loop?” and design around that.

Get your data in shape: Without good data,

AI is just artificial noise. Clear data governance
is the foundation of an effective AI-enabled risk
management program, allowing risk teams to
leverage AI to perform truly transformative end-to-
end automation and make smarter, faster decisions.
Tip: Start by mapping your critical risk data sources
and assigning clear ownership—because without
structured, governed data, AI in risk management will
amplify confusion instead of clarity.

Pilot with purpose: Don’t try to boil the ocean.

Choose one or two high-impact use cases and
run parallel pilots. Compare AI-driven outcomes
to traditional methods. If the results are as good,
or better, then use that evidence to build internal
confidence and regulatory credibility. Tip: Learn from
early adopters in credit and fraud risk. Their success
with AI-powered decisioning has already earned
regulatory comfort.

Build a scalable architecture: As pilots succeed,

expand AI integration across risk and resilience Modernize and stabilize your tech: To
frameworks. Connect point solutions into end-to- effectively leverage AI tools for risk management,
end workflows, align with your GRC systems, and companies need a resilient architecture—a
ensure your data infrastructure can support real- robust, flexible, and secure technology foundation
time, intelligent decision-making. For success as you that enables seamless integration of AI across
scale, you’ll need an ecosystem view of your full AI business systems. A resilient architecture supports
environment and capabilities to ensure AI agents the scale, speed, and complexity of modern data and
are integrated, workflows are resilient, and decision analytics, while ensuring continuity during disruptions
making is based on sound data. Tip: Make sure and allowing for rapid adaptation to evolving risks
strategy and actions steadily move you from siloed and regulatory demands. Tip: Start with the key
to agentic AI, where systems act autonomously and components of a resilient architecture—modular
humans intervene only when needed. system design, cloud-native infrastructure, strong data
governance, and embedded cybersecurity.

AI is revolutionizing 4
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 Bring regulators and third line constituents in real time. Risk professionals will act more like AI
along: Engage regulators early and often. strategists, overseeing intelligent systems, not just
Transparency, explainability, and ethical AI use are no checking boxes.
longer optional—they’re expected. Develop trusted
In just a few years, the risk function will look radically
governance frameworks that show how AI decisions
different. In fact, the change is already underway. Are
are made, monitored, and challenged. Tip: The KPMG
you on your way yet?
Trusted AI framework is a leading strategic foundation
for embedding trust at every step of the AI lifecycle.

Reskill for the AI era: The risk team of the future

won’t look like the one you have today. The future
risk-centric workforce will blend traditional expertise
with digital fluency. You’ll need fewer auditors and
more AI strategists, big data scientists, model
validators, and digital architects. Invest in continuous
learning, especially in AI ethics, model risk, and data
analytics. Tip: Train your risk professionals to not only
use AI, but also challenge it—from how AI models
work, to where they can fail, to how to govern them. KPMG can help you navigate the
Invest in trust-building: AI adoption in risk
AI revolution
management isn’t just a technology shift— From back-office operations to customer
it’s a culture shift. It will only succeed if your risk experiences, AI is transforming risk management
professionals trust and embrace AI insights. Help by driving operational efficiencies, scalability,
overcome resistance or skepticism by quickly and performance. At KPMG LLP, we help you
demonstrating how AI tools improve accuracy and harness the power of AI to transform how
results—or simply make your teams’ daily work you manage risk, driving resilience, efficiency,
easier. You can also involve your risk managers in and business performance. We are uniquely
co-developing AI workflows with AI specialists. It positioned to help modernize how you manage
should help them feel confident models are not risk, offering:
only technically sound, but also align with their • Deep industry expertise in enterprise risk,
expertise and mesh with their processes. Tip: Use financial and operational risk, cybersecurity,
targeted training programs for risk managers to build regulatory compliance, resilience, data, AI
confidence and foster a culture that embraces AI, not and system implementation skills
fears it.
• A holistic risk management approach that
combines AI with traditional practices with
Govern the new risks: Biased algorithms.
market leading capabilities
Privacy violations. Inaccurate outputs.
Compromised models. AI is powerful, but without • An ecosystem of advanced technology
governance, it’s just another risk. Build controls to solutions, such as KPMG Risk Intelligence
monitor these risks just as rigorously as you would • Unwavering commitment to compliance,
any other, ensure human oversight where it matters governance, and ethical AI use
most, and design escalation paths when AI goes
off-script. Tip: Take a look at the KPMG AI Risk and • Advanced data analytics capabilities that
Controls Guide to start designing practical controls to uncover insights and assess risks
manage your organization’s AI risks. • Tailored solutions designed to meet your
specific needs
Conclusion: AI is a catalyst for • Global resources and end-to-end
services that cover the entire risk
risk transformation modernization lifecycle
AI is not just a tool for risk management; it is a By teaming with us, you’ll gain access to our
catalyst for transformation. By moving from siloed deep experience, industry-leading tools, and
solutions to integrated and agentic AI, risk teams can innovative solutions empowering you to stay
move from hindsight to foresight—spotting emerging ahead of emerging risks and capitalize on
threats, modeling complex scenarios, and responding new opportunities.

AI is revolutionizing 5
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Connect with us
Cameron Burke Adam Levy
Principal, Advisory, Principal, Modeling & Valuation, Advisory
FS Risk, Regulatory & Compliance KPMG LLP
KPMG LLP E: adamlevy@[Link]
E: cburke@[Link]

Anand Desai Bryan McGowan

Principal, Advisory, Global and US Trusted AI Leader
Line of Business, Financial Services KPMG LLP
KPMG LLP E: bmcgowan@[Link]
E: ananddesai@[Link]

Samantha Gloede Timothy Phelps

Global Risk Services Leader US Risk Services Leader
and Global Trusted AI Leader KPMG LLP
KPMG LLP E: tgphelps@[Link]
E: sgloede@[Link]

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Principal, Financial Services Risk,
Regulatory and Compliance Network Leader
KPMG LLP
E: bhart@[Link]

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