The Digital Twin: Reimagining Non-Financial Risk Management

AI is accelerating the pace and complexity of non-financial risk, while also creating new tools to manage it. The risk function's fundamental purpose has not changed, but organizations need faster, more connected ways to understand how risks, processes, controls, and dependencies interact. In this episode of _Inside the Strategy Room,_ host Sean Brown speaks with McKinsey's Anke Raufuss, Björn Nilsson, and Laura Webanck about the potential of a digital twin for non-financial risk management. They explore what financial institutions can learn from other industries, how AI can enable a more dynamic view of risk, and how leaders can begin building toward a digital twin as a North Star for risk transformation. *Chapters:* 00:00 – Can AI transform non-financial risk management? 01:43 – Why non-financial risk is accelerating 05:04 – What banking can learn from other industries 09:22 – What is a digital twin for risk management? 13:05 – Managing third-party risk and complex dependencies 18:49 – How AI is changing non-financial risk management 22:29 – How a digital twin could work in banking 27:31 – Connecting risks, controls, processes, and third parties 30:11 – Moving from reactive to predictive risk management 33:53 – How to start building toward a digital twin 40:53 – What AI capabilities do you need? Listen to more than 300 previous episodes of Inside the Strategy Room: Apple Podcasts: https://podcasts.apple.com/podcast/inside-the-strategy-room/id1422814215 Spotify: https://open.spotify.com/show/4TcFfiQ Subscribe to our newsletters: The Valuation Practitioner: https://www.linkedin.com/build-relation/newsletter-follow?entityUrn=7176321474960502786 The Strategic CEO: https://www.linkedin.com/build-relation/newsletter-follow?entityUrn=7236955032997216256 Subscribe to our channel: http://mck.co/YouTube *Find us on:* LinkedIn: https://www.linkedin.com/showcase/mckinsey-strategy-corporate-finance/ X: https://x.com/McKStrategy See www.mckinsey.com/privacy-policy for privacy information.