One of the most crucial aspects of every sector and organisation is risk management. Marketsandmarkets predicts that the worldwide risk analytics market will expand and grow at a Compound Annual Growth Rate (CAGR) of 15.3% from USD 17.60 billion in 2017 to USD 35.92 billion by 2022. With the arrival of the digital age and the emergence of dynamic technologies, risk management is faced with significant challenges from the demand for sector-specific solutions, the escalating expectations of businesses and customers, and the emergence of new risks.
Data security, threat prevention, the impact of system and infrastructure reliability are the three primary subfields of risk management. As a result of today’s rapid digitization and technological advancements, all three of these sectors are undergoing a massive transformation. As a result, businesses are now searching for new, cutting-edge risk management tools to be used by their risk and compliance departments in order to improve processes for identifying, evaluating, and resolving disruptive forces.
Augmented and virtual realities
Virtual reality (VR), augmented reality (AR), the two possibilities for computerised worlds, are currently being widely utilised in many important businesses. The global market for VR and AR was estimated by IDC to be worth $11.4 billion in 2017 and will grow to over $215 billion by 2021.
Virtual reality provides its users with a virtual world to engage with by replicating user vision and hearing. While augmented reality overlays information on a real-life view, fusing the elements of the real and virtual worlds, it relies primarily on total immersion in an artificial environment.
According to BusinessWire, AR is anticipated to be worth $60 billion by 2023, growing at a CAGR of 40.29%, while VR is anticipated to be worth just over half that amount (34 billion), growing at a CAGR of 33.95%.
When discussing virtual reality (VR), it is more about the user’s experience and how they feel when entering a virtual setting. While AR focuses primarily on how users interact with virtual things in enhanced reality,
Wearable headsets or goggles, like Facebook’s Oculus, are always vital components of VR applications. In the commercial sector, a wide variety of AR applications are made available to potential users on devices like laptops, smartphones, and tablets.
Virtual Reality and Maintaining Risk
By enhancing uptime during maintenance and reducing the effects of accidents, VR has found use in some practical applications for risk and compliance management.
Immersive learning and training are made possible by VR-integrated technologies. According to Professor Jeremy Bailenson, who founded Stanford University’s Virtual Human Interaction Lab, users of VR applications recall a third more knowledge from their immersive experience than users of other AI programmes.
Virtual reality is related to various simulations. Modelling emergency circumstances can be quite useful in the context of risk management, particularly for companies that rely heavily on technology and pose a danger. Employees can be trained to handle catastrophic events without risking their lives by using a VR headgear that recreates totally new surroundings.
Using VR technology to simulate accident scenarios
For instance, VR-driven technology in the industrial sector enables simulating a nuclear reactor meltdown or other significant infrastructure failures. It can mimic the emergency reaction to many catastrophic events in a civil context.
By implementing VR, businesses can also enhance initial training and skill maintenance of hazardous equipment, improving handling of complicated systems and management of safety concerns related to significant hazards.
Artificial Reality and Risk Management
AR can be a potent tool for asset maintenance and risk assessments, while VR is typically utilised for training and teaching for danger prevention. By imposing digital information on top of the perspective of the physical world, augmented reality (AR) offers a wide range of possible applications in the field of risk management.
Engineers can detect anomalies in equipment, such as faulty connections, regulatory violations, or abnormal pipe temperature levels, using infrared thermography, which is made possible by AR technologies. Engineers can use thermovision with AR-integrated equipment, which enables detecting minute temperature differences within the apparatus without touching it, lowering the risk of workplace injuries.
AI equal to augmented reality and virtual reality
Extended reality, also known as XR, is the umbrella term for technologies like augmented reality and virtual reality that combine the real and virtual worlds. XR primarily entails augmented reality (AR), virtual reality (VR), occasionally artificial intelligence (AI), and the fields that overlap with them, including deep learning, robotics, machine learning, and natural language processing (NLP).
Users of XR can join a virtual environment, interact with it, and view data in a field of view similar to the real world. Risk and compliance departments can better manage risk and comply with regulations by implementing VR in conjunction with AI.
In order to create a self-learning, intelligent, and optimised framework that will enable businesses to reduce risks, downtime, and costs, Accenture believes that risk and compliance management should begin to adopt new tools and technologies, such as VR and AI. Executives view the transformation of compliance technology as their top priority for investment over the upcoming 12 months, according to Accenture research.
For many institutions, notably financial services firms, compliance is the greatest challenge. The fundamental issue facing compliance departments is the continually expanding body of rules in many different jurisdictions. Many businesses have begun to turn to developing technology to meet this challenge.
While some compliance and risk departments have already used AI-driven solutions to expedite operations and compliance procedures, others have been utilising VR and AR for a variety of applications, including staff training and data visualisation. However, the technologies that are powered by AI and VR are able to assess and discover potential issues and suspect linkages more efficiently.
In summary
For the majority of industries, risk and compliance management is a very difficult subject to work in. One of the effective methods to do so is for businesses to go down the path of digital transformation, moving toward innovations and emerging technology. Technologies like augmented reality, virtual reality, and artificial intelligence (AI) may be the main forces behind improved risk and compliance management.