Conference Presentation, Panel
Big Data: The Next Frontier in Risk Management
Milken InstituteStaci Warden, Eduardo Cabrera, Stuart Jones, Jr., Mark Rosenberg, Stephen Scott, Piros Kouvelis, Jackson Mueller
- Trend Micro anticipates leveraging data to predict emerging threats, citing the unprecedented speed, scale, and automation of the criminal underground as drivers for adopting new detection methods and a specific "writing analysis DNA program" to combat business email compromise.
- The organization expects risks to grow exponentially with the adoption of IoT and industrial IoT, while also planning to integrate HR and non-security data sets in a privacy-compliant manner to analyze security culture.
- Stuart Jones predicts that business integrity ratings will become as critical as credit ratings within the next five years, driven by demand from the next generation, millennials, and ESG-focused investors for granular data.
- Both speakers forecast that within a 5 to 10-year timeframe, expert opinion will become obsolete as machine-human hybrid models advance, with machines not waiting for human consensus.
- Trend Micro expects GDPR to present a significant challenge for multinational organizations, while compliance and privacy debates will remain a major focus for the security industry.
- Mark Rosenberg plans to provide transparent, high-frequency political risk measurements derived from objective baselines to establish superior predictive power for financial markets compared to current offerings.
- Rosenberg acknowledges that bias is inevitable in analytics but expects software development to progressively reduce bias, aiming for outputs that are less biased and more superior than existing alternatives.
- The industry is expected to see consolidation in RegTech and RiskTech over the next 5 to 10 years, with only certain players winning in transaction monitoring and adverse news due to the need for emerging industry utilities and network effects.
- Stuart Jones notes that 60% of the world is classified as high risk, necessitating a five to sevenfold increase in work effort to understand clients, which drives the need for efficiency and new data tools.
- Regulatory frameworks are expected to lag behind technological reality for the next 5 to 10 years, particularly regarding data privacy, the right to invade privacy, and the lack of laws in emerging markets like China which may facilitate rapid adoption of technologies like self-driving vehicles.
- Competition with China in big data is anticipated to be difficult for other firms due to that nation's lack of privacy laws and use of social scoring, while the investment community is currently playing catch-up regarding domain expertise in risk technology.
- Mark Rosenberg argues that the underlying foundations of political risk possess the most predictive power for financial markets and that connecting politics directly to markets will make their product superior to existing solutions.
- Ed Cabrera warns that over-exuberance may occur in technology searches without considering the broader cybersecurity picture, as cyber threat actors are present on every current and future platform.
- The future landscape will involve greater quantification of geopolitical risk, governance, culture, and management, leading to systems where stakeholders can understand working relationships with greater granularity.