Everything in business today involves data or creates implications for it. And as data has become the foundation for modern commerce and communication, digital risk has quite rapidly surpassed all other areas of corporate risk as not just a major concern, but as the major concern.
But what exactly is digital risk? A key difficulty in defining it is the fact that it is so all-encompassing, indeed because data and its related challenges are spread across every business unit, function and stakeholder group within nearly every organization. In our work with clients around the world, across risk and compliance, disputes and investigations and information governance, we’ve realized there are a number of specific business concerns that fall under the umbrella of Digital Insights & Risk Management.
These include the following, along with the corresponding number of business leaders who listed these issues within their top three concerns in a recent survey:
- Data privacy (68%)
- Information security and data breaches (59%)
- Maintaining data quality (37%)
- Ability to remain in compliance and respond to regulatory inquiries (25%)
- Difficulty governing the use of collaboration tools and personal devices (slightly more than 20%)
- Growing data volumes (20%)
- Bringing new systems together post-merger (20%)
- The growing number of data types, formats, and sources (20%)
- Growing data volumes related to M&A activity (less than 20%)
- Artificial intelligence fairness and bias (less than 10%; but notably this survey was taken prior to the recent breakthroughs in generative AI, which has spurred a flurry of new uncertainties)
Privacy and security are top of mind for good reason. However, as demonstrated by the list and figures above, digital risk encompasses so much more. For example, over-retention of data and information, including but not limited to personal data, and the massive variety of data formats and widespread dispersion of data repositories that must be managed.
In FTI Technology’s recent Digital Insights & Risk Management report, one study participant said, “We have concerns about ethics and compliance with regard to ephemeral messaging in particular.” Another said, “We can only govern what we’ve been able to wrap a container around, and those emerging data sources can be hard to categorize.”
In fact, 86% stated that their organization has encountered increased costs or risks associated with the use of emerging data sources such as chat tools, cloud platforms and collaboration applications.
Internal risks — from both current and former employees — were also of concern. Organizations are worried about what data might be walking out the door with departing employees, and are struggling with monitoring for potential weaknesses across the organization. Despite these concerns, only 44% said they conduct regular assessments of their internal risk landscapes. More than one-third of the survey respondents also said monitoring compliance with or enforcing data privacy policies has become more difficult. Still, only 26% are fully proactive in monitoring compliance risks.
Given the high stakes and the potential for high costs associated with digital risk, organizations can no longer afford to treat data as a granular concern or an “IT issue.” At the same time, failure to take digital risk head on can inadvertently result in a loss of competitive advantage. The world’s top-performing organizations are those that have reinvented and continue to improve their strategy and operations using the insights they glean from well-managed corporate data. One business leader recently explained, “We’re on a digital transformation journey, with a holistic vision for how data fits into our organization. By proactively mining data, we’ve not only identified our profit centers but predicted and avoided certain risks.”
Even among organizations that believe they’re managing digital risk well, if they’re defining risk too narrowly, they may be less prepared than they think, and they may be missing out on opportunities to leverage data to drive innovation and growth. Rather, business leaders can think about digital risk in broad sweeps and strategize around it with creativity and a focus on leveraging insights that will drive business growth.
To learn more about the current state of Digital Insights & Risk Management, read FTI Technology’s in-depth paper and survey report, The Most Valuable, Vulnerable Commodity.
The report explains the extent to which organizations recognize the high stakes of data and how business leaders are preparing for and managing digital risk as a bet-the- company concern. It provides findings from quantitative surveys and in-depth one-on-one qualitative interviews with senior business leaders across global geographies and industries. Respondents across North America, EMEA, Asia Pacific and Latin America participated in the study, and more than 90% were senior or executive level leaders, with primary or final decision-making authority. Roughly two-thirds of participants work in organizations with more than 1,000 employees, with 25% from companies with more than 5,000 employees.
The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.