3 minute read 15 Feb 2019
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How to manage the evolving risks of emerging technology

By

Amy Brachio

EY Global Advisory Risk & Performance Improvement Leader

Industry leader in risk management. A voice for working women. Passionate about diversity and inclusiveness. Mother. Wife.

3 minute read 15 Feb 2019

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As the pace of change accelerates, embracing digital transformation becomes more vital. But without the right risk and trust framework, you can do more harm than good.

Without trust, business would face a daily struggle for survival. Trust is essential to commercial success and longevity, making loss of trust one of the biggest risks that any organization can face. Today, trust is more important than ever in a world that is increasingly being defined as uncertain and volatile, with sweeping technological advances and a rapid rate of change, all of which is impacting across geographic borders and across major industries.

We all know that technology can do some great things, and as emerging technology uses richer, deeper data to transform customer experience, it promises even greater things – the ability to understand our individual desires and preferences, anticipate and predict our movements and choices, and serve us in new and undreamt-of ways. Artificial intelligence, robotic process automation and the cloud are three emerging technologies that particularly excite executives because of their capacity to do all these things and completely transform organizations in the process. All three technologies also bring new and more complex risks that, if managed poorly, could lead to the erosion of trust.

What kinds of risks am I talking about? Well, at the recent Business Roundtable CEO Innovation Summit in Washington, DC in December 2018, I heard many business leaders talk about the potential risks associated with AI. AI is only as good as its teacher – its outcomes can be affected by poor training, bias and “bad data.” According to one piece of research, 85% of AI projects through 2020 will deliver erroneous outcomes due to bias in data, algorithms or development teams. This is in part driven by a major shortage of talent in the AI area – the need for these skills, in fact, dominated many of the conversations. This skills shortage is compounded by a related problem, which is how to reskill people who are in roles that will no longer require the same human input when RPA and AI are widely implemented.

Another prominent area of risk that has emerged is the third-party risk that arises when organizations are relying on external providers for these new technologies – a reliance which is set to increase and create an even more complex ecosystem. For example, in the automotive sector, makers are looking to technology firms to supply the hardware and software for connected cars. But this presents a new level risk, as it is not clear who is ultimately responsible for the breakdown in trust if the technology fails or is compromised – the auto maker or the technology company? The auto maker will likely suffer a loss of trust in its brand, but the technology company will likely suffer a loss of reputation in the industry and may prove unable to resolve the fault, causing the entire investment in the connected car to come to a halt.

As one attendee put it, science fiction is becoming more and more science factual – and with Boeing CEO Dennis Muilenburg joining the conversation with legitimate possibilities of flying to Mars, we can only imagine what new risks organizations will need to consider in the coming years.

This means that risk now needs to be considered and designed at the inception of new products, services, channels or transformation – to create trust, all risks must be addressed together, at the same time – and critically, ahead of time. This is the foundation of Trust by Design – organizations must consider all risks from the outset as part of a holistic framework, and not after the event when the horse has bolted and the damage is done.

Risk must be embedded at the forefront of business strategy. And strategy starts with integrating risk capabilities into the front-line business to identify opportunities and anticipate challenges.

It is only by designing trust into every transformation program, every digital product design process, and every organizational culture, that we have a hope of managing all these risks – and more.

If trust and business are inextricably linked, the same holds true for trust and innovation. Trust has to be central to the application of emerging technologies if we want people to use the products and services that they enable and rely on for all kinds of capabilities, whether it’s for their business or personal lives. 

We hear this more and more from industry leaders, researchers and academia: it’s trust that shines a light on the path to innovation. And trust is the new currency to drive value and loyalty.

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Summary

Emerging technology is presenting new ways for organizations to transform. One critical consideration for technology-led transformations is risk: not giving this enough thought can undermine trust, with potentially disastrous results. This is why organziations need to embrace Trust by Design.

About this article

By

Amy Brachio

EY Global Advisory Risk & Performance Improvement Leader

Industry leader in risk management. A voice for working women. Passionate about diversity and inclusiveness. Mother. Wife.