When you think of your home and family environment, digital risk may not be something that is on your mind, but we are all guilty of spending too much time on our mobile devices, and if you have growing children, what is the one thing they are glued to? You got it – Facebook, Snapchat, Instagram, Twitter and the like! Does this provide any value to them? If it does, is there any risk? Do family, friends and culture play a part? And how quickly is the social media landscape changing?
As the famous twentieth century poet, T.S. Eliot, once said: ‘Only those who will risk going too far can possibly find out how far one can go.’
This still holds true in our personal lives or within the business and government enterprises where digital disruption is pushing the boundaries of how we live, interact, commute and work. Coupled with this, disruption is where the power of technology is advancing at an astonishing rate.
So how do digital risk considerations add value when digital risk is more often associated with potential downside effects? To answer this question one needs to understand the types of risk, the risk culture within organisations and the changing face of digital risk management to meet the speed of digital transformation.
Understanding digital risks types
As organisations try to find new ways to add value for their clients, communities, and internal efficiencies through new digital initiatives, it is inevitable that there will be associated risks. There are three types of risk to consider:
Negative risks may have a damaging or harmful effect to organisation’s strategy, including, day to day operational functions. These risks could include events such as cyberattacks, fraud, or regulatory pressures and penalties. Consequences of such risks could lead to financial losses, loss of operations, disgruntled customers or reputational damage. Negative risks need to be mitigated, eliminated or transferred to preserve strategic goals.
Positive risks provide better ways of enhancing business outcomes and adding value to an organisation’s strategy. Such risks need to be considered when embarking on a digital transformation, taking a new digital channel to market, or a smaller scale emerging technology consideration or refresh. Digital risk considerations are aimed to provide organisations with potential alternatives that would create optimal strategic value such as better customer experience, increased revenue, or cost reductions.
External risks are risks that are generally outside of an organisation’s control. Geopolitical, socio-economic, competitor, or environmental risks fall in this category. Organisations need to be aware of these risks and be able to respond in a timely manner so as not to adversely affect its strategic goals.
Negative risks are always the first that come to mind (of parents) around social media. Who will have access to personal information, how is that information being used, is it secure, what about cyber bullying etc.? However, social media does add value (and children are most aware of that) – expressing yourself, exchanging ideas, communicating with friends etc. Does one social media platform provide better value than another and can the positive risks be evaluated to limit usage of one platform versus another?
Risk culture within organisations
As they say, “the buck stops here” – The CEO and the board of organisations. Digital risk and broader risk management is no different. Organisations that fail to adopt digital transformation face the risk of going out of business. CEO, boards, and their executives need to find better, more agile ways of navigating through the negative and positive forces of digital risk to preserve and create value towards strategic goals. This starts with adopting a risk culture at the top and integrating the risk functions across the value chain of the organisation in making strategic decisions on every digital initiative that can add value.
Risk awareness and risk practices need to be embedded into new initiatives by design, and day to day activities down to each employee within an organisation. All interactions with organisation’s business functions and its supply chain requires a risk mindset in evaluating and managing risk. Embracing a risk culture will help establish organisations’ competitive advantage in a challenging market.
This translates to families. I tried to keep my children away from social media for as long as possible - risk avoidance! Eventually we had to give in. I still remember having long chats with them about the downsides of social media and knowing who their friends were, the connections they make and things they say, all mattered. Our key risk mitigation was having my wife as their friend on the social channels – was difficult for them to accept, but was a prerequisite!
The changing face of digital risk management
Traditional risk management that looks at point in time risks and their potential impacts and likelihood need to also look at a third dimension, the speed of change. Risk managers of today need to be equipped with the right tools, and whilst digital risk automation has been around for a while, advanced digitisation of risk management is starting to take shape. Digitisation of risk management will include advanced techniques to predict risks before they happen. Digital risk tools are incorporating Artificial Intelligence (AI), and have advanced analytics to provide quicker, richer and predictive risk information for better decision making in sync with the pace of change.
Of course, digitisation of risk management will not be effective without the human factor involved, and digital risk managers need to be multi-skilled. They must be digital savvy and have the ability to influence senior stakeholders within the business. They must be analytical to rationally decipher huge amounts of information, and they must be economically aware to understand the influences of internal and external commercial factors that affect transformation.
In the age of digital transformation, digital risk management will create value for businesses once the risk types are understood and when there is an integrated risk culture embedded in companies’ framework and vision.
It won’t be long until digitisation or risk management informs individuals of the risk they may be facing on social media in real-time. I know my children would listen to robots more than they would myself!
If you take anything away from this, it is that digital risk management skills are vital for the future of our families, our companies and ourselves as individuals living in the ever evolving contemporary world.
About the Author
Meet Sunil
With over 25 years of experience in the digital Risk, cybersecurity and Information and Communications Technology (ICT) fields of practice, Sunil Sharma's expertise lies in setting up comprehensive digital risk strategies and executing successful roll out of risk controls. He has led several digital risk advisory and consulting engagements across energy, resources, financial, retail, and entertainment industries.
For more information please visit www.ghd.com/digital or contact Sunil at Sunil.Sharma@ghd.com.
