Digital transformation has revolutionised the way that business operations are managed. Organisations can now run more efficiently and cost effectively than ever before. However, as processes become increasingly interconnected, cyber attacks and data breaches become more likely and more dangerous. Consequently, organisational interdependency leads to both great advantages and costly risks.
Within the financial industry alone, digital risk losses totalled $23 billion in the first half of 2019 (CB Insights 2019). These losses were the result of five major risks:
- Third-party security and regulatory compliance risks. Often, data breaches originate from one of an organisation’s third parties or suppliers. Regulations such as GDPR are designed to ensure that an organisation and their third parties maintain a robust cyber security posture. Failure to do so not only puts an organisation at risk of a cyber attack, but also means they are liable for the relevant fine.
- Unauthorised access to digital channels. Organisations must ensure that their systems can only be accessed by authorised employees. Precautions such as regularly changing passwords or using multi-factor authentication are often not implemented.
- IoT security vulnerabilities. Lack of encryption, insecure interfaces and weak or outdated software security are just a few examples of critical security vulnerabilities found within IoT devices.
- Faulty data privacy controls in big data and analytics. Personal identifiable data must be collected and shared only as necessary, minimising the risk of hackers stealing sensitive information.
- Misalignment between digital risk management and strategic business outcomes. Risk management that is not aligned with the business strategy will not mitigate the business impacts, such as financial implications or reputational effects, of a cyber attack.
These issues are only escalating – as new technology is implemented and integrated into business operations, more vulnerabilities are likely to appear. Cyber security is currently an afterthought, often provided by an outside source.
As digital transformation progresses, organisations should begin implementing cyber security principals into their business processes, thinking about security while they are designing or updating their products and operations. This can go a long way to reducing major risks and maintaining a streamlined business.
However, risk management does not stop there. Instead, organisations should implement a continuous cycle of identifying various risks across their operations, followed by analysis and further management. By constantly reviewing potential threats and taking business-conscious steps to mitigate them, organisations can proactively reduce their risks.
Just as new innovations are developing daily, new threats are also proliferating. Keep your organisation secure and your business running smoothly by considering all of the consequences of digital transformation.