Digitization has brought many benefits to businesses, but it also brings a new set of risks across a range of industries.
Perhaps the most well-known of these risks is cyberattacks. As companies digitize more sensitive information and processes, this kind of attack has been increasingly common across all industries. It is interesting to note that not all attacks come from the outside. IBM’s 2016 Cyber Security Intelligence Index discovered that 60% of cybersecurity threats come from people inside the company. Only a quarter are accidental, while the rest include malicious intent. In either case, hackers can gain access to the personal data of your clients and customers. Personal data is particularly vulnerable in retail companies, the public sector, financial services, and healthcare. One of the best-known examples is an attack on Anthem Health Insurance that compromised 80 million social security records. This kind of attack affects your reputation and your customers’ trust.
Cyberattacks also threaten your company’s data, leaving confidential business documents such as insider information exposed. Finance remains one of the most vulnerable areas. In this slideshow, Thack Brown, general manager and global head of SAP’s Line of Business Finance, has identified five ways organizations – and in particular, CFOs – can stay ahead when it comes to cybersecurity.
While cyberattacks are a significant threat, companies face other risks as well in our digitized, global world. Nonetheless, it’s possible for companies to prevent and manage these modern risks.
Other types of risk
Online payment fraud is a major source of concern for retailers with e-commerce sites. Paula Rosenblum, in her article on Forbes, explains that as companies create more security in stores with EMV (Europay – Mastercard – Visa) standards, the expectation is that online fraud will rise. This creates demand for continuous real-time fraud monitoring software of all transactions. In a recent Forrester study, 41% of organizations report being extremely concerned about fraud.
Multinational corporations are impacted by exchange rate changes. In the current economic environment, volatility is new norm. A company can be affected by changes in currency in its own country as well as countries where it does business. With an increasingly global world, even smaller companies can be affected by these currency risks. Companies need full visibility into their positions and the ability to simulate the impact of the exposure in order to take steps in a timely manner to mitigate those risks.
Companies also face reputational risk. For example, Apple faced reputation problems when consumers learned it was supporting practices that were not socially responsible by hiring manufacturers in China with poor working conditions. Business Insider points out that Apple had many reasons for doing so, including the cheaper price per piece and the established manufacturing industry in China. But that sound business decision affected its reputation with customers. These additional risk factors must also be taken into account when assessing the potential impact of decisions. Reputational risk is of extreme concern to 37% of organizations, according to Forrester.
It is still important for companies to follow changing compliance standards to minimize regulatory risk. For example, IFRS 15 is a new standard that will be effective in early 2017. Companies need to be ahead of the implementation, Laurence Nichols states, so they are prepared when it goes into effect. This standard controls contractual relationships and will provide more consistency across all industries globally. These new standards, although they apply to all industries, will particularly impact the high tech, telecommunications, and manufacturing industries.
These are just a few examples of risk for different industries. Learn more about how Forrester ranked the different type of risks – financial, technology, cyber, operational, and others – and their potential impact in its 2016 study.
First published in the Digitalist. Let me know your comments and feedback @jucubiss