Jack Aitken – Contributor

Risk management first emerged as a concept to help avoid unfavorable outcomes by weighing risks against rewards. Once primarily associated with the financial industry, particularly with the stock market, it has become a crucial part of most business fields. With the rapid evolution of Artificial Intelligence (AI) and the fluctuation of global markets, risk management is continuously being redefined – this has the  potential to impact a large number of current, as well as future university students.

Before the introduction of AI, risk management relied heavily on historical data, statistical models, and human experience to predict losses and instabilities. However, this reactive approach often proved to be insufficient, posing a massive problem for financial corporations, big data companies, and governments. In response to this problem, many institutions decided to adopt a proactive approach instead of a reactive one. 

AI was introduced to risk management to accomplish tasks that humans could not. By developing AI programs and algorithms specific to their needs, companies gained the ability to analyze vast amounts of data in real-time, identify patterns, and predict potential risks with greater accuracy. The evolution of task automation has never been as critical as it is now, as industry leaders strive to develop better programs to gain a competitive advantage in the market.

Despite the significant impact of AI, financial uncertainty often overshadows its role in the evolution of risk management. Shifting politics, global pandemics, wars, and other factors all affect the global economic environment. The economic stability that existed in the years prior to the 2008 financial crisis is a distant memory, necessitating changes in how risk management is assessed. 

For students, financial uncertainty is not a positive development. It could lead to an economic downturn, affecting job prospects and the quality of education available amid budget cuts. However, students can use the importance of risk management to their advantage. 

The development of modern risk management – driven by AI and financial uncertainty – could significantly affect students in the future. For those who can understand and manipulate modern risk assessment tools, numerous prosperous job opportunities await after graduation. 

It is also important to understand how risk management impacts students in the present. Many institutions now use AI technology to fast-track the job application process. AI scans candidates’ résumés to see if they possess the key skills sought by employers. If not, the résumé is typically discarded, saving companies money, time, and human capital that can be redirected elsewhere. 

In the ever-changing economic climate we live in, and with the constant progression of AI, the notion of risk management has remained the same, but the way we evaluate it has been completely altered. If students can adapt to this new environment and its inevitable changes, understanding risk management can become a tool for success in their personal careers.