2.8.2011
By Adam Bates
Last weekend I spent time putting away a stack of CDs (ranging from Yellow Brick Road through to The Specials to some strange Russian Choral music).
Generally, I listen to music streamed from iTunes and find CDs somewhat quaint and to be honest a bit of a pain, so I started to think:
1. Why on earth am I ‘putting away’ the CDs for another day? It feels a bit like finding old floppy discs in a drawer - completely useless. Some of us (well those of a certain age) still like being able to hold a CD, but perhaps that is a bit like wanting to bore your family with last summer’s holiday snaps from a projector using Kodachrome slides.
2. By moving from vinyl records through to CDs and now to more compressed music formats, most consumers have shown they are very willing to accept lower quality music in exchange for sheer convenience.
3. The thought of going to a store
to flick through records, CDs, DVDs or books seems so alien. It is a lot easier to click a mouse than waste time struggling to get to a shop and face a relatively limited selection.
Now, the rate of change of behaviour driven by technology is increasing. A year ago I acquired an iPad. Today I buy most of my newspapers through an app called PressReader, my magazines through Zinio, on-line books through Kindle and films on iTunes. In this short time I changed 51 years of ingrained behaviour.
In South Korea, Tesco (which trades under the name Home Plus) developed a very innovative on-line shopping experience. In subway stations and other locations they have full-sized photographs of shopping aisles, perhaps 5 feet high and 20 feet long. While waiting for a train you can use a Smartphone to scan the QR code for each item and order it without the need for a lap-top or iPad.
The change in our behaviour driven by technological change is happening so fast that I believe in many cases risk management cannot keep up.
There are a few issues to explore
First, are we making the most of technology to help with our risk obligations? The technology available today is for real time continuous auditing and continuous monitoring. Risk dashboards show real-time temperature checks of key risks in an organisation; be they money laundering suspicious activity reports, credit notes issued, firewall alerts or whatever needs monitoring. Yet adoption seems fragmented.
Secondly, are employees (perhaps the most senior ones) adopting new technology into the business before the appropriate risk assessments and mitigating controls can be designed and implemented? The widespread adoption of iPads for corporate emails appear to be less secure in some cases and can encourage bad behaviour; for example sending documents to your home email account for editing on the iPad.
Thirdly, does the demand by customers for access to ‘their’ real time data through apps or the ability to make payments using contactless technology, leave companies’ core systems more vulnerable to attack by criminals, hackers and foreign governments?
Fourthly, are there technologies which are going to destroy current business models? The answer to this question is oh yes, definitely, absolutely and with completely certainty. The real question is which models and when? 3D printers will make it possible for consumers to download designs and print clothes, chocolate bars, customised cutlery for children and much more. This has significant implications for physical shops, distribution companies and owners of intellectual property.
Finally, is our complete, and indeed increasing, reliance on complex computer systems leaving us vulnerable to attack?
In summary, I believe risk professionals must assess ‘technology risk’ in its widest sense. The downside of not doing so is life threatening to many organisations, and increasingly we’ll see these examples being played out time and again.
In the meantime, does anyone want to buy 400 CDs from me?
Other stories you may find of interest:
Posen leaves London for Washington
Adam Posen is leaving the Bank of England Monetary Policy Committee (MPC) it was announced this afternoon.
