Risk Professionals Must Increase Their Understanding of Disruptive Technology and Its Risks
May 02, 2017
A disturbing percentage of risk managers are unaware of the prevalence of disruptive technologies in their organizations and the impact of those technologies on their organizations' risk profiles, according to a report published jointly by Marsh and RIMS, the Risk Management Society. Risk professionals need to close this substantial knowledge gap to manage rapidly advancing disruptive technology risks. Doing so will allow them to play a leading role as their organizations address complex challenges and opportunities in this environment.
The 14th annual Excellence in Risk Management report, "Ready or Not, Disruption Is Here," finds an apparent lack of awareness among risk professionals on existing and emerging technologies, including telematics, sensors, the Internet of Things (IoT), smart buildings, and robotics, as well as their associated risks. For example, when presented with 13 common disruptive technologies, 24 percent of the respondents to this year’s survey said their organizations did not currently use or plan to use any of them. This is surprising, the report notes, considering that other studies have found more than 90 percent of companies are either using or evaluating IoT technology and wearable technologies.
The report also found that despite the impact disruptive technology can have on an organization’s business strategy, model, and risk profile, a majority of respondents—60 percent—said they do not conduct risk assessments around disruptive technologies.
“Today’s disruptive technologies will soon be—and in many cases already are—the norm for doing business,” said Brian Elowe, Marsh’s US client executive leader and coauthor of the report. “Such lack of understanding and attention being paid to the risks is alarming. Organizations cannot fully realize the rewards of using today’s innovative technology if the risks are not fully understood and managed.”
Such lack of clarity brings opportunity for risk professionals, the report notes. As previous Excellence in Risk Management studies have shown, C-suite executives and boards of directors want to know what risks loom ahead for their organizations and are increasingly relying on risk professionals to provide that insight.
“As organizations adapt to innovative technologies, risk professionals have the opportunity to lead the way in developing risk management capabilities and bringing insights to bear on business strategy decisions,” said Carol Fox, vice president of strategic initiatives for RIMS and coauthor of the report. “As a first step, risk professionals are advised to proactively educate themselves about disruptive technologies, including what is already in use at their organizations, what technologies may be on the horizon, and the respective risks and rewards of using such technology.”
In addition to closing the substantial knowledge gap about these risks, the report advises risk professionals to expand their networks inside and outside their organizations to enhance their opportunities for effective collaboration on ways to evaluate and manage the risks; obtain the data and analytics tools needed to identify and manage the risks and hire people with the skill sets to facilitate the process; and consider the wider impacts of disruptive technology, such as the ramifications on insurance coverage.
"Ready or Not, Disruption Is Here," is based on more than 700 responses to an online survey and a series of focus groups with leading risk executives in January and February 2017.
Findings from the survey were released at the RIMS 2017 Annual Conference & Exhibition. Copies of the survey are available on Marsh.com.
May 02, 2017