Managing Data Security Risks of AI Technology
Over the next decade, cyber and digital technology risks, shifts in labor expectations and growing geopolitical tensions will shape corporate landscapes. To effectively navigate these challenges, the entire management team and board must become risk professionals. Forward-thinking global businesses should not silo their risk management responsibilities. Leaders should bring their unique points of view on risks to the broader discussion on threats that may await in the coming months and years.
Protiviti’s annual Executive Perspectives on Top Risks study surveyed more than 1,100 board members and C-suite executives from organizations in various industries and identified the following top risks facing corporations today and those expected a decade ahead:
Top Risks for 2024
- Economic conditions, including inflationary pressures
- Ability to attract, develop and retain top talent; manage shifts in labor expectations; and address succession challenges
- Cyber threats
- Third-party risks
- Heightened regulatory changes and scrutiny
Top Risks for 2034
- Cyber threats
- Ability to attract, develop and retain top talent; manage shifts in labor expectations; and address succession challenges
- Adoption of digital technologies requiring new skills in short supply
- Rapid speed of disruptive innovations enabled by new and emerging technologies and/or other market forces
- Heightened regulatory changes and scrutiny
These risks are intertwined and leaders will need to address them through comprehensive risk strategies. Based on the top risks for 2024 and 2034, cyberrisks, the economy and talent have all emerged as major themes driving concerns for leaders that need to be addressed simultaneously.
Uncertainty in the Market
It is important that executives weigh today’s economic conditions against the possible costs a decade from now and make prudent choices that increase company resilience, which will be foundational for success in the years to come.
Developments in the geopolitical landscape—including central bank policies, outsized government stimulus, the West’s de-risking reliance upon China and regional conflicts—are fueling continued uncertainty in markets. Although not recorded as a top risk, geopolitical events had a significant ripple effect across the risk landscape. Before the Hamas attack on Israel on October 7, 2023, the survey found that no risk issues were rated at the “Significant Impact” level for 2024. In responses gathered following the attacks, risks increased. Four risks, including cyber threats, third-party risks, economic conditions and the ability to attract and retain talent, were rated at the “Significant Impact” level, pointing to the interconnected nature of these risks.
As continued economic uncertainty increases the possibility that governments and various agencies will interfere with market functions through regulatory action, there is uncertainty around the likelihood and magnitude of industry-specific and pervasive changes in the regulatory landscape. Leaders should build dependable forecasting capabilities to create accurate scenarios to ensure their organizations are prepared and resilient for all future business conditions.
The Acceleration of Cyber Threats
Cybersecurity jumped into the top risks in both the near- and long-term after not making the top five last year, reflecting growing recognition of the impacts of a complex cyberrisk landscape.
Over the next decade, technologies such as artificial intelligence and the anticipated emergence of quantum computing will change how organizations secure their data, raising significant security-related questions. Many organizations are increasing their reliance on outsourcing and co-sourcing arrangements to achieve operational and go-to-market objectives. Organizations must ensure that these outsourced arrangements and third-party partners comply with current laws and regulations to confirm that their enterprise and customer data are secure.
Geopolitical tensions are playing a larger role in the cybersecurity landscape, and this is likely only going to increase in the years to come. Competing national interests, nation-state territorial aspirations and global terrorism are powerful forces that can affect cyberrisk assessments in particular regions and countries.
Organizations that deploy forward-looking lead indicators and integrated analytics are likely to be more proactive in identifying and successfully defending against cyber threats.
Managing People-Related Risks
The ability to attract, develop and retain top talent; manage shifts in labor expectations; and address succession challenges will be a challenge for business leaders long-term, as reflected in its ranking as the second-highest risk for 2034. This continues a trend highlighted by the last two surveys.
Initiatives to incorporate new technologies drive the need to reskill and upskill employees, presenting a challenge both now and in the future. Despite fears about AI replacing jobs, it is clear that technology is a critical part of addressing talent-related risks as it provides opportunities to streamline work and free people up for more strategic and meaningful activities.
Despite a long-standing talent struggle, companies have not yet cracked the code on long-term talent solutions, so the related risks will persist over the next decade.
Risk Over the Next Decade
Interestingly, survey results indicated a relatively stable risk landscape. When considering top risks in the next 10 years, four of five risks identified by survey respondents were the same as in last year’s report. However, the risk levels are elevated over the next decade, confirming that organizations’ risk profiles are sensitive to events and risks that can emerge rapidly and sometimes unexpectedly, underscoring the likelihood of more disruptive times ahead.
This dynamic risk landscape and its elevated risk levels mean that we could be facing a decade of disruption. Today and in the future, leaders will be expected to manage multiple external risks effectively to keep the business running smoothly. To do this, C-suites and boards need to be nimble to address concerns on a variety of strategic and operational fronts and keep pace with the speed of change.
Reprinted with permission from Risk Management Magazine. Copyright Risk and Insurance Management Society, Inc. All rights reserved.
Written by Matt Moore, 2024
Source: https://www.rmmagazine.com/articles/article/2024/07/18/top-business-risks-for-the-next-decade