Differentiating with trust
Today’s megatrends illustrate a world in motion where the pace of change is accelerating.
Disruption is taking place across industries and geographies. Advances in technology development have become one of the key forces driving change and causing disruption, together with globalization and demographic change.
Individuals and organizations are connected in a way that we have never seen before and that is accelerating through the rapid expansion of mobile devices, and development and adoption of emerging technologies.
With the right response, disruption offers tremendous upsides to organizations that can harness its forces. However, the evolution of the digital enterprise also presents significant challenges, including:
- New competition
- High pace of change
- Changing customer engagement and business models
- Unprecedented transparency
- Privacy concerns
- Cybersecurity threats
As the amount of digital information grows exponentially, devices become smarter and connectivity increases, the digital environment is likely to become even more complex. Trends towards more social networking, the growth of cloud computing and varying (and often lagging) national regulations will only add to this complexity.
Customers are looking to do business with companies they can trust and executives are looking for risk leaders to help protect the organization while not impeding the agility and speed in enhancing customer intimacy, reducing cost and increasing value. The leading organizations of the future will be those that differentiate on the basis of trust and the leading risk executives will be those that are able to translate uncertainty into confidence.
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In this age of digital disruption, risk executives must consider:
- How digital disruption could affect their organization
- How their risk function needs to transform as they embark on their digital transformation journey
- How they can take advantage of the new technologies to optimize their risk function
- What new skills they would need on their team to effectively manage new digital risks
The accelerating pace of change
Technology advances fueled by the convergence of social media, mobile devices, cloud, big data and the growing demand for anytime anywhere access to information are disrupting the business enterprise and blurring industry boundaries.
While some technologies like cloud and mobile are well known, there is an ever-increasing number of emerging technologies that are modifying traditional business models. Technologies, such as artificial intelligence, robotic process automation (RPA), internet of things (IoT), block chain, 3D printing and many others are revolutionizing business models, disrupting entire supply chains and enhancing customers’ experience.
Companies increasingly need to consider the adoption of digital technologies to keep pace with competitive product advancements as well as the ability to deliver them in different ways at lower costs.
Risk functions need to rapidly evolve to be agile enough to keep pace with the change and have the skills to understand and manage new risks impacting their business.
In this age of technology disruption, risk executives must:
- Understand the organization’s strategy and portfolio of emerging technology – balancing the portfolio for the greatest overall investment, risk and reward
- Advise on how to embed security and controls in emerging technology efforts
- Understand the risks associated with emerging technologies and how to manage them
- Establish a risk function that is agile and with the right skillsets, processes and tools to respond to new risks quickly and effectively
- Leverage emerging technologies to optimize and transform the risk management function
Businesses that recognize these new risks early on can capitalize on the associated opportunity but also need to manage new risks inherent to the adoption of a new digital/disruptive solution.
To fuel better performance in a digital world, leading companies are not only identifying and mitigating risk, but they are turning digital risks into competitive advantage to activate digital trust.
Understanding and managing risk
Organizations need to recognize that digital transformations are not just about technology.
Digital transformations require the right focus on risk management associated with it: while eliminating some risks, digital business can create new, or magnify existing risks that present significant threats if not managed appropriately.
They will need to focus external risk governance on the enterprise’s ecosystem in order to build resilience. They will also need to understand how to transform their risk management function and obtain the right skill sets as they embark on their digital journey.
Translating uncertainty into confidence
How can EY help build a digital trust framework?
A digital trust framework can help organizations contribute value by benefiting from the right risks while staying compliant, capable and protected across the digital ecosystem. It can focus on:
- Trusted strategy
- Developing a process to assess risk and adjust investments to invest in the right digital projects
- Identifying and assessing the associated risks that impact your business and determine response
- Trusted implementation
- Building security and controls into digital program development
- Improving organizational structure, risk management policies and processes to create agility
- Leveraging technology to more effectively execute and sustain tools and processes, including cybersecurity
- Trusted operations
- Building trusted operations from the implemented tools
EY’s digital trust framework aims to help our clients understand the risks they are facing, incorporate risk into their strategy by taking advantage of the right risks, while helping to limit and protect their businesses from preventable risks.
In the world of ever-increasing automation and digital data, establishing a continuous monitoring approach to identifying, prioritizing and responding to risk triggers coupled with predictive analytics, elevates an organization’s risk response mechanism from reactive to proactive and predictive.
EY’s broad range of digital risk capabilities, tools and accelerators can give our clients the foresight and business confidence to navigate the complexities of today’s and tomorrow’s risks while creating and maintaining digital trust.
Risk organizations need to maintain a robust and agile risk-aware function that both empowers and is enabled through innovation. This requires specialized skills and tools to keep pace with today’s rapid pace of change.
Every business should ask these questions:
- Is your risk management function transforming along with your organization’s digital transformation?
- Do you have the organizational agility and the right skill sets to respond to digital risks quickly and effectively?
- Do you understand the risks associated with digital technologies and how you should manage them?
- Are you picking the right digital projects? Are you balancing your digital portfolio for the greatest overall investment, risk and reward?
- Are you embedding security and controls in your digital projects?
- Are you designing your operations to ensure you effectively manage risks?
Why is your best digital strategy a human one?
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How can businesses manage risk and build the confidence to thrive in an era of disruption? See our opinions, articles, insights and videos.
Disruption is changing the way the world works. It’s happening quickly. And it’s creating opportunity, if you can keep up and even get ahead of it.
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