Digitalization is going to disrupt the businesses across the globe significantly over the next decade. Already Internet, Cloud and Mobile technologies disrupting the fundamental operating models in most of the industrial sectors. On top of it, various emerging digital technologies such as Internet of Things(IoT), Virtual Reality (VR), Robotic Process Automation(RPA), Machine Learning(ML), Artificial Intelligence(AI) etc. are adding an additional layer of complexity causing confusion and creating digitalization dilemma i.e. how to or from where to start the journey of digitalizing the business.
No doubt, digitalization is unfolding itself as a critical survival risk of the business than ever before. However, today’s situation is no different from that of the disruption the business corporations went thru in the 1800s due to industrialization, in 1900s due to automobile revolution and in 2000s due to IT revolution/computerization where some of them thrived, survived, disappeared, and even some appeared and emerged as leaders from nowhere.
Unlike previous disruptions, the scope of digitalization and its impact on the business is so vast and unique that on the one hand, it may affect the very existence of the enterprise itself and on the other side, it can be leveraged to mitigate other critical risks and improve the business performance of the enterprise. However, because of the emerging digital technologies at one end and the limited organization’s resources, time and budgets on the other end the business leaders are increasingly finding it difficult to identify & prioritize right processes and select/implement right digital technologies to survive thru the digitalization wave.
In other words, the ultimate question that’s lingering in the minds of many business leaders today is how to embark the journey of digitalization? Well, the answer lies within “Enterprise Risk Management.”
Most of the business corporations have already established an Enterprise Risk Management (ERM) program by adopting various risk management frameworks such as COSO ERM, ISO31000 to monitor and manage risks of the enterprise.
An enterprise risk management program, if implemented effectively, can provide deep insights to the emerging risks that are not only going to impact the business internally but also the threats that might be affecting the organization externally from outside, i.e., the from competitors, and across industries, markets, consumers and geographies. Business leaders can leverage these emerging risk insights to identify and prioritize the business units/processes, develop and implement strategies for adapting the right digital technologies and successfully navigating the business thru the digitalization wave.
The critical steps to thriving and not just survive business thru digitalization wave are –
- Establish a new or optimize the existing Enterprise Risk Management program by enhancing the scope/coverage;
- Implement a right GRC technology platform to automate and enjoy the benefits of a robust Enterprise Risk Management Program;
- Implement and integrate analytical / data visualization tools with GRC technology to enable business leaders to do predictive analytics and gain insights into emerging enterprise risks;
- Establish a steering committee under the stewardship of Chief Executive Officer (CEO) to embark digitalization journey of the business. The committee should consist of at least Chief Operating Officer (COO), Chief Financial Officer (CFO), and Chief Risk Officer (CRO) and other business leaders from the business side and Chief Technology Officer(CTO), Chief Information Officer(CIO), and Chief Information Security Officer(CISO) on the technology side as its core members;
- Business leaders may leverage the emerging risk insights gained from ERM program to conceive the vision and embark the digitalization journey, the CTO and CIO may collaborate on architecting for giving shape to implement that vision, and the CRO and CISO may partner in safeguarding the business from potential risks & threats thru-out the digitalization journey;
- Develop and implement digital governance, e., develop a digital strategy and implementation roadmap and align to enterprise risk management strategy. Establish processes to fine-tune the digital strategy and update implementation roadmap based on emerging risk insights;
- Communication is the key. Socialize what digitalization means to employees and establish a bi-channel contact to avoid gossiping, giving room for interpretation, and keeping the momentum.
As stated above, the business leaders can leverage ERM as a focal point to drive the digitalization journey of the business as it provides the foundation necessary, to transform the digital risk into an opportunity by harnessing the power of digitalization to mitigate prioritized enterprise risks, improve the performance of the business and enhance the stakeholder’s value. Thereby thrive and not just survive the digitalization wave.