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Enabling digital transformation by managing culture risk

Future of risk in the digital era

Misalignment between an organization’s goals for digital transformation and employee values and behavior creates new culture risks.

Why is this trend important today?

This article is one of nine trends outlined in Deloitte's Future of risk in the digital era report. 

As organizations transform to thrive in a digital environment, their success is affected by how well they integrate their workforce into the transformation journey. Organizations need to construct a digital culture thoughtfully, incorporating principles of experimentation, smart risk-taking, continuous learning, and collaboration. They must understand how to transmit this culture beyond their employees to their contractors, vendors, and other workforce participants, even software bots acting on behalf of the organization.

Building a digitally savvy leadership and skilled workforce to enable intelligent and ethical use of technology will make the difference between a successful transition and one that’s beset by risks and glitches. Digital transformation requires the overhaul of culture beyond technology updates or process redesign in order to reap the anticipated benefits.

Where has this trend had an impact?

  • The failure of a digital transformation project undertaken by a federal government to centralize and automate a financial system was blamed on a lack of digital culture attributes, such as transparency, accountability, and willingness to experiment.
  • A large insurance company started experimenting with robotic process automation. One year later, it was still unable to deploy a robot to carry out processes, largely due to an old-fashioned organizational culture averse to new technologies.
  • Employee concerns around the use of emerging technologies for potentially harmful purposes led several organizations to succumb to employee pressure and curtail work in areas that include controversial uses of technology.

Culture connected

What does this mean for organizations?

  • Missed anticipated returns from digital transformation initiatives due to cultural resistance or slow adoption of digital technologies.
  • Increased likelihood of irresponsible behavior across the organization, if managing risks continues to be seen as someone else’s responsibility or a check-the-box compliance effort.
  • Increased need for improving workforce skills to create a culture where technology and humans complement each other, including knowing how to work around machine limitations and biases.
  • Reputational consequences of unprecedented levels of transparency into corporate decision making and prevalent culture through social media websites and public forums.
  • Loss of market competitiveness due to organizational challenges in balancing an experimentation mind-set and a risk-averse culture.
  • Challenges due to misalignment of services provided by temporary or gig workers who have limited understanding of the organization’s strategy and culture.

Connection points

How can organizations respond?

  • Establish an organization-wide culture risk-management program to understand the prevalent culture, identify signs that highlight culture challenges (e.g., through employee behavior monitoring, social media sensing), and institute behavioral changes needed for successful digital transformation.
  • Refresh organizational core values to embed desirable behaviors, such as smart risk-taking, collaboration, continuous learning conducive to digital culture transformation, and performance metrics and incentive structures aligned with digital culture goals.
  • Conduct periodic pulse checks through talent surveys, town halls, and online platforms to evaluate employee engagement as well as connect with digital culture transformation initiatives.
  • Cultivate a digitally proficient risk function to drive early collaboration with business and technology teams leading digital transformations.
  • Embed risk-based decision making and risk management concepts in digital proficiency programs to enable a digital culture and frontline employees to take smart risks effectively.
  • Use behavioral science techniques and training to nudge employees toward desired behaviors, and reinforce these through monitoring high-risk activities.

Digital connection

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