Why insurance risk leaders worry about AI's impact on staffing

Takeaways:

• AI raises concerns about productivity, expertise and ability to evaluate its impact
• Insurers identify functions most likely to be affected by AI

Corporate risk leaders must contend with the impact of AI on their staffing and specializations, according to a new EY survey.

The third annual edition of the "New shape of risk" report saw an increase of 19 percentage points in respondents concerned about their staffs' ability to adapt to a changing risk environment.

"For the value that risk functions are playing, the stature has risen, but also the value of what the risk organization is providing to better run an insurance company," said Stu Doyle, principal in the consulting practice at EY. "You need talent to support that."

The survey compiled responses from chief risk officers and senior risk executives at 106 insurance companies and Institute of International Finance (IIF) member firms worldwide. 

Respondents' top concerns about AI impact on their risk teams were improving productivity while keeping staff levels steady, hiring expert specialists and evaluating the impact over the next three years.

"You have firms that are advancing and are further up the curve with technology, and you see it in artificial intelligence," Doyle said. He called it surprising that over 25% of firms said they are still evaluating the impact of AI. While using AI can increase risks, Doyle noted, using AI techniques can help better manage risks and stabilize costs, he said.

Assessing the AI impacts that respondents cited, Doyle said the responses show that insurers are investing in talent, but do not yet have enough skilled people to implement AI. 

"It's going to take a while for risk functions," he said. "They're adding talent where they can, but everybody in the world is looking to add digital, AI technology talent as well. Do they have enough? No. Are they working on it? Yes. Are they training and developing? Yes. Are they looking for outside help? Yes, but it will be a journey."

Routine risk management and improving data-science skills ranked as the staff functions that will evolve most because of AI, according to the survey. 

"They're going to need domain expertise, but some of the interviewees said they may want credit risk expertise, or market and interest-rate expertise," Doyle said. "But they also need to know advanced techniques in technology or AI."