Insights

How disruptive technologies are changing the game in risk

Science fiction is becoming science fact. There is a wave of so-called disruptive technologies on the near horizon that promise to have a great impact on our personal lives and our business practices. Very recently we have seen the advent of driverless vehicles, wearable devices with the capacity we previously enjoyed in large computers, as well as computers that are increasingly able to make decisions based on “learning” from past decisions and experience. Estimates suggest that by 2017, the world will be adding a trillion sensors per year, ushering into existence a fully functioning Internet of Things.

This wave of change will bring new challenges for risk professionals as the risk universe expands and the speed of exploitation becomes ever faster.

This blog will focus on five areas of technology where great leaps forward are not only theoretically possible but are, in fact, already happening. They are:

  • Wearables 
  • Drones (self-piloted/remotely piloted devices)
  • Open-source technology
  • Artificial intelligence/cognitive computing
  • Sensor proliferation

These technologies will have a fundamental impact on how we do business and have potential to be disruptive in the marketplace. A recent Deloitte Consulting study entitled, “Age of disruption Are Canadian firms prepared?” identified that the majority of Canadian business organizations are not well prepared to profit from or cope with this coming wave of new technologies. As those responsible, directly or indirectly, for managing risk in our respective organizations, we need to go beyond knowing which technologies are coming next. We need to understand the impact these technologies will have and address the readiness of management to manage these opportunities and the attendant risk. A good starting point is looking at the various types of risk these technologies can create.

  • Security risks – As soon as data is digital, it’s vulnerable. We are already in an environment where our data and systems are vulnerable to cyber threats. As sensors proliferate, as increasing reliance is placed on decisions based on advanced cognitive computing and as our systems and data are resident in sensors, wearable devices and drones that will reside outside the traditional bricks and mortar of our organizations the threat of cyber-attacks and exploits will also proliferate. Increasingly intellectual property and personal identifiable information will be transmitting through cyberspace, along with financial data and other information that will be attractive to cyber criminals. Protecting this information is clearly a paramount concern and the scope and strength of cyber defences will need to advance apace with the new technological advances.
  • Physical risks – Any technology that moves things creates some degree of risk. All five of the above-listed technologies potentially impact the way items move. Robot lawnmowers, automated warehouses and self-driving big rigs could all be in our collective future. Of course, there’s a big difference in the risk potential between a driverless forklift that suddenly shuts down and an out-of-control 18-wheeler careening across a highway. We’ve already witnessed a high profile drone injury in the case of singer Enrique Iglesias who cut his hand during a recent performance when he reached out to a drone device that was following him. (Like a trooper he continued singing despite his bloodied hand).
  • Decision risk – As management functions are farmed out to computers and automated processes, the question becomes what happens when mistakes are made? Artificial intelligence that improperly stocks a refrigerator is a very different risk than a robot doctor that “reads” body scans and makes a diagnosis. If a computer is guiding decisions, what controls are in place to make sure those decisions are ultimately correct and ethical?
  • Support risk – As is always the case with new technologies, some endure, others fall away. Those responsible for managing risk have to examine their organization’s reliance on these emerging technologies and how prepared they are to either support their development or, if necessary, find alternatives. This is particularly true when it comes to open-source technology that depends on participants to develop it leading to concerns about change management and indeed ownership of the software asset. 

Regardless of the technology or the risk it creates, our most critical job is ensuring we ask the right questions of the right people involved. The first step is to understand usage and anticipated adoption in your particular field. Obviously each sector will incorporate different aspects of technologies in different ways. Getting a handle on how technological advances are going to be used in your space is an essential first step.

Once you know how the various technologies are most likely to be applied in your field, determine the events they will impact. Will cognitive computing replace human decisions in some area? Will connected sensors tell machines when to stop and when to go? Is your computing architecture going to be based on source code developed by an army of open source participants? The answers to these questions will guide the areas of risk you must assess.

Senior executives will have their own questions. How will these disruptive technologies impact the business marketplace and will new competitors emerge? What are the specific legal risks of the applications of new technology in our business and sector? Does it create conflict with other stakeholders? Identifying these questions is essential to getting answers.

Clearly, emerging technologies present incredible opportunities that we can use to our great advantage. We must be vigilant about opening the door to risk as well as benefit, and create a solid plan to protect our day-to-day business operations.

A final pair of thoughts for all of us to consider: Firstly, these new technologies are not arriving one at a time. While their application will differ across sectors and vary greatly depending on organizational maturity, we will be dealing with multiple technology advances concurrently. The interconnectedness of so many digital data points makes data analytics ever more important as a tool to manage this proliferation.

Secondly, we must consider the cascade effect these developments create. There will be increasing interdependencies between technology advances and one unchecked risk could lead very quickly to other unanticipated consequences.

These will be exciting times and the need for proactive and intelligent risk management will be greater than ever. Enjoy the ride!


 

Did you find this useful?

Related topics