Digital disruption: Getting proactive about digital risk
The evolution of risk management
It’s been said that the future belongs to the fast. Certainly digital technology has changed the pace of business, and in the start-up era companies are more conscious than ever of their speed to market. Risk leaders have always had to worry about security, privacy and compliance, but digital disruption is having a significant impact on the way organizations must manage risk. In a business world that is agile and responsive, your risk management strategy must be equally agile and responsive.
Put it this way: risk management methodologies need to evolve from being compliance-based, reactive, and linear to being proactive, risk-based, and iterative. Unfortunately, many organizations still aren’t there. Organizations must learn to adapt their existing risk and control frameworks to new technologies.
Failure to act – the biggest threat of all
We believe that rather than inhibiting performance or limiting what you can do, proactive risk management helps you build a stronger bottom line. The path there may differ from organization to organization, but the core principle of adapting our risk management tools to drive greater efficiency and profitability remains the same. Risk is inevitable in any business, but suffering negative impacts of disruption is not.
And the fact is, you will either disrupt or be disrupted. That’s because digital transformation is about more than technology. It’s also about culture, and your organizational culture must evolve. A failure to acknowledge this by adhering to old models of risk is the one risk you can’t afford to take.
Successful risk leaders will therefore approach risk issues as overarching business concerns and make the privacy, security, and risk teams active participants throughout a project’s lifecycle—from planning and design through implementation, testing, and deployment.
Everything old is new again
Naturally, some risk challenges remain constant, while others are introduced by new technology. Either way, we see risk functions responding to emerging trends:
- Refining your risk appetite: As your risk management strategy changes, so will your risk appetite. With a proactive approach, you may find your business’s capacity for risk changes and that frameworks need to be revisited.
- Data analytics: Companies use data to make better decisions and optimize profits. Predictive analytics in particular is a promising development. However, you have to think ahead about your customers and their privacy concerns.
- Privacy: Privacy laws don’t keep pace with technology, but regulators still expect organizations to keep evolving with best practices. Enter privacy and security ‘by design.’ Customer data can hold incredible insights, but you must respect user privacy and keep your data secure. Prevention of cyber threats and privacy breaches now go a long way towards protecting your reputation and brand.
While new trends will emerge and continue to shape the risk landscape, one thing is clear: the need for increased speed to market will persist but should not come at the cost of increased exposure to risk. Designing a proactive approach to risk management is your best opportunity to balance the demands of speed and the need to protect your bottom line.