Today’s enterprises must identify, manage and mitigate a range of critical risks that, if activated from potential to realized, can do much more than damage a quarter or wreck fiscal year: it can hurl them into the dustbin of business history. According to Hyounsik Noh, a graduate student in Enterprise Risk Management at Columbia University, here are three critical risks that today’s enterprises face and, ultimately, must overcome to ensure both near-term success and long-term survival:
1. The Journey to Digital Transformation
Digital transformation is generally defined as an integration of digital technology across all areas of an enterprise, and which fundamentally shift how it operates and delivers customer value and experience. While all aspects of this definition are important, the most critical is rooted in the word “fundamentally.”
Indeed, many enterprises are unpleasantly discovering that their previous attempts to implement digital transformation have not gone deep enough; or if they want to be brutally honest with themselves, many changes have been largely superficial and cosmetic, instead of deep-rooted and re-defining. However, there is no turning back the digital transformation dial. On today’s relentlessly fast-paced and hyper-competitive landscape, enterprises need to go all-in on digital transformation — and step well outside of their comfort zone in the process — or they will inevitably find themselves behind the competition.
According to Hyounsik Noh, to survive digital transformation, enterprises need a clear vision that permeates the entire organization, from the top down, and across all teams and departments. It is not just a technology play. It is essentially a culture change. Naturally, there is significant risk involved, but doing nothing or refusing to re-think and re-invent policies, practices and paradigms is far riskier. Digital transformation is either a profitable ally or a costly enemy. There is no standing still, and there is no middle ground.
2. Locking down data, but without stifling productivity.
Enterprises are facing increased — and in many countries and jurisdiction unprecedented — scrutiny with respect to how they collect, store, and share private and sensitive data; both pertaining their own workforce, and those of their customers, strategic partners, suppliers, vendors, and other external stakeholders.
However, while enterprises need to lock down data to stay a step ahead of cyber criminals, hackers, nation states, and other bad actors — including many that are surprisingly well-organized and funded — they must also find ways to keep their in-house and remote teams productive and efficient. Hyounsik Noh states that this is an extremely difficult balance to strike because the situation is very fluid — new threats from both outside and inside the organization are emerging all the time — but it is one that enterprises must achieve; or at the very least, have the infrastructure, experts and policies they need to respond rapidly and intelligently to information security risks when, not if, they happen. Failure to do this can result in huge regulatory fines, civil lawsuits, and lasting reputation damage that may never be completely repaired.
3. Riding the wave of disruption.
For a while, enterprises in relatively more conventional and traditional industries like insurance, healthcare, and financial services could watch from the sidelines, as other firms in spaces like consumer electronic goods, entertaining, and taxis grappled with (and are still grappling with) massive disruption. However, that was then and these days, there are no spectators — because all enterprises must deal with disruption, whether they like it or not.
Hyounsik Noh claims that executives need to adopt an agile approach that allows them to minimize the negative impact of disruption, while they exploit the positive possibilities. They have to find a new normal where they ride the wave of disruption, or else they are going to get crushed beneath it.