Login     Sign Up     |      Home      Regions      Verify a Certification     EBA Portal    

Balancing the Benefits and Risks that Comes With Technological Evolution


With the impact of technology in the current world, technological evolution has become one of the most talked about subject globally. Activities of companies and consumers revolve around technological innovations.
 
There has been a dramatic improvement in the manner in which businesses and consumers interact: mobile communication is the latest tool in the communication world, blockchain has rolled out its promising long-term offers, retirement savings have become easier with robo-advisors, the traditional methods of saving are gradually replaced with more flexible modern methods.  
 
This stride in technology and advancement of human interaction is bound to experience a more dramatic evolution in the near future. Also, the population mix has significantly affected business operations. With the combination of the aged “techtarded” workforce and the young technologically inclined workers – each having a different level of technological exposure – offers a whole new challenge to business organizations; in terms of coordinating its staffs, as well as their interaction with clients. These new opportunities are, however, not without their individual risks. These risks involve:
•    Personal: who has your private digital identity?
•    Business: What happens to my business, suppliers, and clients when it gets hacked?
•    Political; and
•    Global.
 
Cyber watchdogs are constantly on guard, in a bid to curb these risks. These regulators involve The Committee on Payments and Market Infrastructures (CPMI), Board of the International Organization of Securities Commissions (IOSCO), New York Department of Financial Supervision or the Office of Financial Research. These regulators have pinpointed risks associated with technology – cyber risk in particular – as the primary threat to financial institutions which could pose severe system failure.
 
With this stride, there is an apparent recognition of the role played by risk management in the financial sector. It is becoming more sophisticated by the day. The role of risk management has shifted its focus from market and credit risk. It now concentrates on a broader aspect which involves regulating and controlling macro and technology risks. Although IT teams understand technological risks, they should not end within the organizational structure – but integrate risks of service providers (since it has become a common trend for organizations to outsource some aspects of the business), potential investors (curbing the effect of any loss suffered by investors as a result of cyber-attack), and suppliers. With these increasing threats, companies are left with two options: ignore the threats and do nothing or adopted untested technologies.
 
This shows an advancement of the risk control, identifying the interaction of the different forms of threats. Risk management demands a structure which involves cooperation among stakeholders, enlightenment/education, accountability and transparency and excellent communication. Companies ought to run a conceivable, scenario assessment, not only on market activities but technology and macro risks. Organizations should begin to ask these questions:
•    What would be the consequences if their cloud provider fails?
•    How many of their customers or third party services depends on the same provider?
 
Technology has never recorded the level of growth as it does today. Although this growth comes with some amazing benefits, it also exposes a business to potential risks that need to be tackled proactively. Now, this is the big question left for organizations to answer sincerely "Is your organizational risk framework tailored to cater for the constantly evolving technology risks?"