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The risks and opportunities of Blockchain

Disruption in the boardroom

Trust continues to be one of the most essential elements in an organization’s ability to secure and retain support from the investor community, customers and other external stakeholders. However, in an increasingly digital world of big data analytics, e-commerce and mobile payment platforms, organizations must fundamentally challenge the way they view and evaluate trust.

Question for boards to consider

  • Have management identified who or which business function owns responsibility for managing the implications and exploring the potential of disruptive technologies such as Blockchain?

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An understanding of the implications and impact of “trust” technologies such as Blockchain are now a vital component of an organization’s strategy and risk frameworks and as such boards must now develop a line of sight into the associated risks and opportunities they present. 

In simple terms, and at its core, Blockchain technology secures and tracks digital transactions. Sounds straightforward – a digital, encrypted, decentralized, distributed ledger – but this “simple” solution has potentially vast implications for organizations – particularly across some sectors such as Financial Services, Health Care and Energy.

Having rapidly outgrown its early roots in cryptocurrencies (such as bitcoin) Blockchain now has the potential to:

  • Simplify and enhance transparency in core business functions such as supply chain management, auditing, tax, compliance and back-office operations
  • Rapidly increase the volume of automated transactions
  • Help reduce fraud through enhanced identity management

However, while Blockchain has the potential to revolutionize the way we do business, boards must also consider some of the associated challenges with the adoption of the technology such as:

  • Regulatory and legal environments are still under development and as such are open for interpretation
  • Implementing and standardizing Blockchain requires significant investment, including legacy system integration and retraining of the workforce where appropriate
  • A lack of real-world enterprise testing, and the rapid development of Blockchain platforms make it difficult to stay ahead of the curve

To learn more about Blockchain and its implications for your organization read the 2017 EY Global Blockchain Summit overview.

Questions for the board to consider

  • Have management identified who or which business function owns responsibility for managing the implications and exploring the potential of disruptive technologies such as Blockchain?
  • Have management developed a strategy to manage the implications and impact of Blockchain to the business and the industry? If so, has this been communicated and shared with the board?
  • What specific digital trust and information security concerns, if any, have customers, partners or suppliers raised? What has been management’s response and have the board been consulted?
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