Technological developments have a major impact on business activities. Not only do new opportunities arise, but also new risks. What are the main technological changes, and what risks have arisen as a result? And what strategies can be used to control those risks? In this blog, Piet-Hein Touw, Director of Risk Management at Schouten Zekerheid, shares relevant results from the benchmark survey on risk management recently conducted by Schouten Zekerheid .
Digitization and automation
Many companies are in the midst of a digital transformation. They are digitizing and automating their processes to operate more efficiently. Furthermore, they are developing new business models based on advanced technology. Think Product-as-a-Service concepts, based on apps, for example the Swapfiets. Our benchmark shows that renewing processes is at the top of the list of priorities around risk management. This is understandable, because the more dependent a company is on technology, the greater the impact of system failure. This can be caused by technological issues, but also by inadequate security. In addition, automation often makes jobs redundant, causing upheaval in the organization.
Strategies to manage these risks: train employees to work in new roles, invest adequately in cybersecurity and ensure a backup plan in case of system failure.
Big data and analytics
Today's software tools allow companies to collect and analyze enormous amounts of data. This gives you more insight into the behavior of (potential) customers and allows you to make more informed decisions. The risk is that employees do not handle customer information in the right way or that sensitive data ends up on the street. This leads to reputation damage but also to fines under the AVG. Privacy concerns, data abuse and data security risks therefore rank third on the list of priorities around risk management in the benchmark.
Strategies for managing these risks: create a culture that encourages strict compliance with the AVG and ensure strong security protocols.
Artificial intelligence and machine learning
AI and machine learning can automate more and more tasks. This also brings new risks. Algorithms are often a "black box" so they cannot be checked (properly) for biases. This can lead to ethical issues, where people with certain characteristics are not treated fairly. Because AI models are trained with past data, unwarranted predictions can also be made. Take an insurer where the AI system made people with red cars pay more premiums because compensation for totaled red Ferraris was overweighted. However, managing AI risk is near the bottom of the priority list in the benchmark. Yet three-quarters of them agree that AI will begin to have a significant impact on their risk management.
Strategies for managing these risks: make AI systems' decision-making processes transparent, keep monitoring them - because they "learn" from new input - and implement ethical guidelines.
Cybersecurity and cloud computing
Businesses are not only more dependent on technology. Digital systems are also more often used remotely through cloud computing, for example by home workers. This makes organizations more vulnerable to cyber attacks. Moreover, the methods used to break in digitally are increasingly sophisticated. Evidence of this is the daily stream of reports of data breaches and successful ransomware attacks that usually result in major financial and reputational damage. Cybercrime is therefore rated in the benchmark as the risk with the greatest impact. Meanwhile, 57% of companies appear to have insured against it.
Strategies to manage these risks: invest in advanced security measures, train employees to increase their security awareness and develop a plan to adequately respond to digital security incidents. Further, ensure up-to-date backups of data and also evaluate cloud providers' security measures.
Social media and online presence
Social media allows you to build customer relationships and promote brands (on a global scale). Think of company pages on Facebook or Instagram and LinkedIn posts. Conversely, dissatisfied customers can air their complaints (or even false information) on social media. This can lead to negative hype that continues to affect a company's reputation for a long time. Furthermore, employees may post on their own social media accounts that are not in line with brand values.
Strategies to keep a grip on these risks: monitor what is being posted about your company on social media, respond as quickly as possible, (especially if the posts are negative), and implement a social media policy for the organization.
Still participate in the benchmark and download the complete report
It is not only the use of new technology that brings risks. All sorts of other developments also affect your risk profile. How can you manage those risks and how do other companies do that? You can find out by taking part in Schouten Zekerheid's benchmark. Immediately after completing the questionnaire, you will receive an overview that clearly shows where you stand compared to other companies. Click here to participate and download the report.
In our benchmark report you can find information to professionalize your own organization. Do you have questions or need advice? Please feel free to contact us.
