New Delhi [India], September 1 : Artificial Intelligence (AI) is increasingly helping businesses manage risks more effectively and make better decisions, according to a report by Rubix.
The report, citing some examples, highlighted that AI enables insurance companies to make risk predictions at scale by analysing huge volumes of data.
It stated, "AI enables Insurance Companies to make these risk predictions at scale on huge volumes of data which would be very difficult for human beings to do".
According to these predictions, the report suggests that insurance companies can refine their business models and adjust pricing strategies according to the level of risk involved.
The report explained that risks can be divided into different stages, including in-process risks. A notable example of in-process risks comes from the operations of credit card companies and payment systems, where fraud is an inherent challenge.
Companies such as Visa and Mastercard deploy highly sophisticated systems to monitor transactions, identify potentially fraudulent activities, flag and stop suspicious transactions, and immediately alert card users.
The report shared that these fraud analytics systems are significantly strengthened with AI, making them more effective.
The scale of operations also highlights the importance of AI.
Mastercard, for instance, experiences nearly 200 fraudulent attempts every minute. During 2018-19, the company prevented fraudulent transactions worth USD 52 billion across its network.
When a business functions on such a massive scale, the report pointed out that AI becomes a critical part of its anti-fraud systems.
The report further explained the importance of post-facto risk analysis. After a risk event occurs, investigating the cause is essential to prevent similar incidents in the future.
AI algorithms and machine learning tools can be used to test systems and identify vulnerabilities, allowing companies to strengthen their defences and plug gaps.
Another area of growing importance is cybersecurity. In today's always-on, digitally connected world, individuals and organisations are continuously exposed to potential cyberattacks. With the constant flow of electronic messages across multiple devices, the risks are high.
The report stressed that it takes a machine to beat a machine when it comes to detecting and responding to cyber threats. Many technology tools and email solutions now incorporate strong AI layers that detect intrusions, block attackers, and provide effective defence mechanisms.
The report concluded that AI has very significant uses in cybersecurity, fraud detection, and post-event analysis, making it a vital part of modern risk management strategies for businesses.
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