Do businesses understand their digital risks adequately? Source: Shutterstock

Do businesses understand their digital risks adequately? Source: Shutterstock

Understanding digital risks requires a mature understanding of technology

PURSUING the digital transformation agenda poses many risks to companies — exposing them to cyberattacks, data management and compliance issues, a variety of employee-related risks, and so on.

However, neglecting to go digital isn’t an option. Customers today seek the convenience and transparency offered by technology and place a premium on products and services provided by digital-native, digital-first, and digital-only businesses.

To overcome the risks and ensure the successful shift to digital, business leaders need to gain a better, more mature understanding of technology.

In the financial services industry, for example, the demand for digital services is significant enough to change the dynamics of the market. Customers are not only looking for more convenience but trading personal data for better deals and offers.

Surviving in such a market is tough for traditional players. Their slow adoption of technology is a result of leaders heeding the advice of risk managers who suggest being cautious.

According to a recent study, only 11 percent of risk managers in the financial services space said they would describe themselves as fully capable of assessing the risks associated with adopting artificial intelligence (AI) across their organizations.

Just 9 percent said this of robotic process automation (RPA) and just 5 percent about blockchain.

The reality is that a lack of understanding of technology is slowing down digital transformation, especially among traditional businesses that don’t have the experience needed to thrive in the new era.

Fortunately, risk managers and business leaders understand this challenge and are working on finding ways to overcome it.

While risk managers have traditionally relied on historical data to make inferences about the future, thriving in the digital world means they need to understand technology and build models that can forecast with a certain degree of reliability.

According to some experts, businesses that fail to gain a strong understanding of technology are almost certain to struggle with scaling digital transformation initiatives across the enterprise and climbing the digital maturity curve.

Heading into 2020, business leaders need to focus on educating themselves in order to drive their business forward. Customers won’t wait much longer, no matter the industry or segment. Businesses need to compete on the basis of their digital capabilities — that’s the need of the hour.