Corporate Governance - The importance of emerging technologies
Last year, the struggle to implement controls to mitigate cyber-attacks intensified. With growing tensions in Jamaica and as far as Russia and China, 2015 unquestionably continues to observe more battles in the global cyber war. Countries have become alert to the need to defend their cyber interests. Even though, there have been numerous benefits in the digital era, fraud has increased at a distressing rate. For instance fraud including cyber-attacks has become a crippling problem for corporations across a number of industries such as banking, government and healthcare. The magnitude of this issue has been further demonstrated recently as President Barack Obama has proposed $14 billion for the fiscal 2016 to boost cybersecurity across the United States of America.
Nonetheless, the impact of emerging technologies continues to propagate with a larger influence on entities' strategic plans. Emerging technologies are technical innovations which denote advanced developments within a field to allow for competitive advantage. According to the 2015 World Economic Forum's Meta-Council on Emerging Technologies, examples of emerging technologies include additive manufacturing (3D Printing) and distributed manufacturing as the continual strategy to replace as much of the material supply chain as possible with digital information. Companies are using emerging technologies to drive revenue growth. As such directors are increasing their focus on integrating IT initiatives throughout their business.
However with the increased security risks, the establishment of a rigorous, structured process related to the management of emerging technologies is crucial and should be monitored by those charged with governance.
"Big data analytics"
In the simplest terms, big data analytics is the process of examining large data sets containing a variety of data types to uncover hidden patterns, trends and other useful business information. Entities should:
- Seek to improve their capability to identify data attacks and to respond to the progressively refined threats, and
- Identify mechanisms to accumulate all relevant data into a single "big-data" warehouse to accurately mine and filter information related to cyber risk.
The establishment of a rigorous, structured process and methodology to secure data, support analytics and enable the detection of abnormal activities is crucial in managing the risks in your business and industry. With the use of Big Data, the strategic objectives of companies may change. Institutions are using Big Data to perform targeted marketing, enhance customer experience, better manage their talent, improve operational performance, and mitigate risks to assist with improving corporate governance.
Cloud computing is defined as a type of computing that relies on sharing computing resources rather than having local servers or personal devices to handle applications. A number of entities are adopting "cloud computing" technology to allow for reduction in expenses through eliminating the need for in-house servers and data centers.
Organizations have invested in cloud software to manage mainly human resources and financial information. However, executives continue to have concerns about the cloud such as data security and privacy risk.
Companies are using social media to increase brand loyalty and recognition, as well as to improve their customers' experience. But the related risks of social media related to its misuse and the resultant impact on an entity's reputational risk remains.
Typically, management's responsibility includes obtaining an understanding of the future impact of technologies. However, the Board of Directors should obtain management's perspectives on how the organization is handling the strategic risks related to technology.
Directors' role in Corporate Governance with a focus on Emerging Technologies
- Inquire about the organization's technology strategy and how it is integrated into the overall business strategy, with a focus on what creates value for the organization and how that could become either disrupted or enhanced by technological developments,
- Establish a strategy to use a combination of emerging and existing technologies to make enhancements to optimize things that are imperative to the business,
- Determine whether your entity is using emerging technologies effectively to drive growth,
- Identify the mechanisms in place to manage the related risks associated with emerging technology, and
- Agree on the board's oversight role for significant emerging technologies adopted by the company.
About the Author
Tricia-Ann Smith DaSilva is a Senior Manager at PricewaterhouseCoopers, a Board Member of the American Board of Forensic Accounting and a Member of the local Chapter Formation Committee of Information Systems Audit and Control Association. [email protected]