DIGITAL DISRUPTIVE THINKING IS HARD
Assessing digital risk can be a tricky business. Risks can have multiple impacts on a company or initiative, and the digital landscape is constantly evolving. However, some risks are more prevalent than others, and boards must be vigilant in monitoring them.
One risk that can have a significant impact on a company is aging infrastructure. Outdated servers and devices not only drain cash but can also introduce serious cybersecurity risks. That's why it's crucial for boards to conduct an infrastructure review every 18 months to ensure the company is up to date and protected from potential cyber threats.
Skills availability is another risk that companies must contend with. With every new technology introduced, the need for experts with deep expertise in these areas grows. This makes it challenging for companies to fully staff these functions, and boards must ensure that talent management programs are in place to recruit, partner, and develop the necessary skills.
Culture risk is another consideration for boards as they transition a company to a digital economy. Independent consultants and third-party service providers can bring specialized skills and expertise to the table, but they must be viewed as partners rather than competitors. Directors should be sensitive to these dynamics and identify any cultural clashes that could impact talent management.
Ultimately, the biggest risk is an uninformed or slow-to-respond board. Without a solid understanding of digital technology, boards risk excluding the single most impactful external force from their strategic calculations. It's essential for boards to stay up to date with business risks and pivot quickly when new technology changes the way business is conducted.
To stay on top of digital risks, boards must shape their agendas in a way that's appropriate for the company's needs and state of change. Short, digestible, and impactful reports that provide the necessary insights are essential to governing the transition to a digital economy. By taking these steps, boards can successfully manage digital risks and stay ahead of the curve.
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