Unlock AI's true potential: Why most risk managers are missing out!

Education

Introduction

Hi everyone, a year ago I started using ChatGPT for my risk management job. What quickly became apparent was that ChatGPT is trained on a broad list of sources related to risk management, capturing both effective and ineffective strategies. As a result, the answers I received were akin to the "wisdom of crowds," which included approaches proven ineffective through scientific research, publications, books, or my personal experience.

The Problem with General Models

I discovered that certain practices made no sense and were a waste of time, yet ChatGPT kept suggesting them as best practices. A year ago, I set out to create a fine-tuned model within or external to ChatGPT that would include knowledge vetted by me, sourced from the Risk Academy blog, YouTube channel, and nearly a thousand blogs and videos, along with five years of Risk Awareness Week workshops — approximately 200 workshops from risk professionals and decision-making experts.

Creating a Specialized Model

The result was the creation of a chatbot which provided much more reasonable, practical, and useful answers about risk management, integrating risk analysis into decision-making, using various quantitative techniques to improve decision-making, planning, budgeting, contingency calculations, and performance management. Then, I spent a year interviewing different users who use this Risk Awareness Wisdom Bot (RAWBOT) every day.

Two Applications of Chatbots in Risk Management

1. Methodology Advisor

The first application is what I call the "methodology advisor." Here, people ask questions like, "What is Risk Management 2?". The chatbot responds that Risk Management 2 involves using risk analysis specifically in decision-making contexts rather than just for risk governance reports. This includes performing smaller, quicker, and sometimes more quantitative risk analyses targeted at specific decisions like budgets, business plans, and investment proposals.

Methodology advisors are useful for education, helping users understand risk appetite practically. But this approach has its limitations.

2. Day-to-Day Work Supplement

The second, and in my opinion, much more practical application is using chatbots to supplement your day-to-day work. In this scenario, think of the chatbot as a junior risk manager. For example, if you need to integrate risk analysis into a tendering and procurement process, you can ask the chatbot to help you identify risks.

Practical Examples

For instance, if you're conducting a tender to select a transportation company for mine personnel, you'd typically create a list of risks to include in the Request for Proposal (RFP). The chatbot can help identify risks like delays, breakdowns, safety performance, and financial stability of vendors. Digging deeper with the chatbot can generate in-depth questions for potential vendors and suggest how to mitigate these risks through contracts.

Similarly, other tasks like conducting FMEA workshops, drafting risk management policies aligned with ISO 31000, or preparing for specific workshops can be assisted by our chatbot. The chatbot can generate suggestions, help draft outlines, and even provide translated texts for multilingual organizations.

Conclusion

Based on interviews with thousands of users, I see two applications of chatbots in risk management. The first is where risk managers use chatbots to learn methodology — an individual educational tool. The second, more effective application is where risk managers outsource day-to-day tasks to the chatbot. This produces high-quality drafts and ideas that can be quickly validated and integrated into practical decision-making processes.

Keywords

  • ChatGPT
  • Risk Management
  • Methodology Advisor
  • Risk Analysis
  • Decision-Making
  • Tendering and Procurement
  • Quantitative Risk Analysis
  • Risk Awareness Week

FAQ

What are the two main applications of chatbots in risk management?

The two main applications are as a "methodology advisor" for educational purposes and as a tool to supplement day-to-day risk management tasks, similar to a junior risk manager.

How can chatbots help in the tendering and procurement process?

Chatbots can help identify risks to include in RFPs, suggest in-depth questions for potential vendors, and offer ways to mitigate these risks through contract clauses and service level agreements.

What is Risk Management 2?

Risk Management 2 involves using risk analysis specifically for decision-making rather than just for generating periodic risk governance reports. This includes quicker, more targeted risk analyses for specific decisions like budgets, business plans, and investment proposals.

How can chatbots assist in drafting risk management policies?

Chatbots can provide outlines, brainstorm questions you should consider, and even offer suggestions based on existing industry practices. They can generate drafts that can be fine-tuned and validated by the risk manager.

What makes the second application of chatbots more effective?

The second application is more effective because it moves beyond education to practical assistance in daily tasks. This helps streamline the process, making risk managers more efficient by outsourcing initial research and drafting to the chatbot.