AI’s Risk Paradox: Automates The Tasks, Still Needs Humans

Auditors and compliance teams can no longer outrun the AI evolution. The AI Applied Radar for risk management explores how AI is reshaping the risk management function now and into the future. Key findings show that:

• AI’s near-term value lies in its practicality.

  AI performs best in structured, high-volume areas such as GRC workflows, where processes are well defined and outcomes are verifiable. Regulatory intelligence and compliance are emerging as the most reliable entry points for AI adoption, as they involve comparing controls against emerging regulations – a repeatable, low-judgement process. By rapidly parsing large documents to flag control gaps and new risks, AI enables teams to review and refine outputs rather than starting from scratch, saving time and reducing workload.
  

• Leadership should view AI as a way to repurpose talent, not replace it.

  Even the most mature AI use cases are only able to automate certain tasks within workflows – keeping humans in the loop – as opposed to complete end-to-end processes with no oversight. AI should therefore be seen as an enabler rather than a competitor: it should be used to automate low-risk, time consuming and routine risk processes, and shift manpower instead to building AI strategy, governance and risk mitigation plans.
  
  

• Improper AI usage amplifies risk instead of reducing it.
  Businesses and vendors must recognize that AI is not the answer to every risk management challenge. In claims management, for instance, AI can accelerate triage and fraud detection, but still struggles with complex or disputed cases that require expert human judgement to accurately and fairly manage them. More dangerously, AI models have the tendency to hallucinate to fill in gaps where information is missing or fragmented, which could lead to unfair outcomes for claimants.
  

As AI applications mature within these domains, stakeholders will demand more robust AI governance frameworks to prove investment value – and customers will require transparency from vendors to build trust.

For a deeper dive, read the full report here: Verdantix AI Applied Radar: AI Applied To Risk Management, and for more on AI governance, sign up to our webinar: Mind The AI Governance Maturity Gap.