What are your technology “unknown unknowns”?
The risks around emerging technology continue to ratchet up
Jim Buckle is managing director of LoveFilm, the DVD-by-post and video streaming service owned by Amazon (he was previously its CFO and then COO). And you'd be hard pushed to find anyone more acutely aware of the risks of emerging technology.
"We know that our business, as it currently stands, won't exist in the future," he says. His vision is prescient. DVD is currently the dominant format for movies, but in 10 or even five years it's unlikely to be the case. Content will be delivered online. And who knows how subscription or payment methods will work then.
"So we need a framework for making key decisions about its evolution. How will we invest in digital services? How will we maintain our distinctiveness in the market?"
Buckle is lucky in that respect. His team knows for certain that emerging technologies are going to disrupt the business – they even know how it might happen. So managing the risk around those new approaches is seared into their thinking.
But for many chief financial officers, those same risks exist – but they aren't as visible. In Donald Rumsfeld's legendary quotation, they're "unknown unknowns". And that's just one reason why emerging technology is considered a top five risk in an Ernst & Young global survey of senior executives.
"This risk really falls into two categories – IT and non-IT," says Craig Glindemann, partner at EY. "The non-IT risks are around organisations failing to take advantage on innovation at the same rate as their competitors. IT, on the other hand, is about a host of issues within organisations – such as consumerisation or digital security."
But in both cases, it's those "unknown unknowns" that can really trip up any organisation. Take social media: even just the proliferation of new sites – like Yammer, a kind of Facebook for the enterprise which already has 100,000 organisations registered – means it's almost impossible to set appropriate controls and policies that will ensure you're not exposed.
Employees simply don't realise the risks they're creating when they use networks – sometimes to their own cost.
Take the case of John Flexman, a HR manager at BG Group. He was fired for ticking the "interested in career opportunities" box and uploading his CV to his LinkedIn profile. BG claimed this constituted a breach of a new company policy on conflict of interest. (Ironically, Flexman worked in graduate recruitment – and one of the chief risks in this area is adapting technology approaches to meet the demands of tech-native workers coming into the business, as we'll see.)
My data's bigger than yours
But the organisational risks from IT are many faceted. The trend for "big data" (massive amounts of semi-structured data a company creates, which until recently couldn't be analysed and used) creates a whole new set of risks around privacy, for example. Data protection laws – as Google found out when it changed its privacy rules – create regulatory risks as technology starts to take on its own momentum.
"You need to be able to allow flexibility in customer, supplier and employee interactions in a multi-channel environment while maintaining security and privacy – and protecting the integrity of the overall IT architecture," Glindemenn says. "But it's really a question of opening up the opportunities and targeting engagement and productivity – then working out how to manage the downside risks."
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