Digital technology continues to drive immense business opportunity, and with that comes an ever-increasing need for boards to understand and mitigate significant risks.
Cyber security
Recent ransomware attacks impacting various NHS Trusts, Royal Mail, and The British Library to name just a few illustrate the ever-present threat of cybercrime. Data breaches can cripple businesses, eroding finances and customer trust. Non-executive directors shouldn’t shy away from technical jargon but instead seek clear explanations to understand threats such as phishing emails and social engineering tactics. Boards should support and challenge the executive team to provide data and insight around the identification of assets and threats, the assessment and prioritisation of risks and the management and mitigation of those risks. It is crucial that boards have a positive attitude and a culture that views a cyber-attack as inevitable, employing the resources required to identify and implement security measures and plan for incident response.
Data governance and privacy
Data is arguably an organisation’s most valuable asset, but mishandling it carries hefty fines and reputational damage. Non-executives can help ensure a board prioritises data governance and privacy by asking questions to understand how customer data is collected, used, and protected - as well as about how the organisation is compliant with GDPR and PECR regulations. Strong data governance minimizes risk and safeguards reputations.
Emerging technology
Artificial Intelligence (AI), blockchain, and the Internet of Things (IoT) are revolutionising industries. Non-executives should spend time understanding these trends to identify both opportunities and potential risks. AI can drive creativity, efficiency and entirely new business models but also be biased, lack transparency and displace jobs. How are responsible organisations even equipped to manage the substantial legal and ethical considerations of AI? Blockchain can drive transparency and efficiencies but is also energy-intensive and unregulated. For IoT, the benefits around automation and user experience are vast, but security weaknesses, privacy concerns, and a lack of standardisation can create problems.
Digital transformation
Digital transformation isn't just about technology – it's a cultural shift. While it can streamline operations and enhance customer engagement, it naturally carries risk. Boards should scrutinise the proposed strategy: are the goals, budgets, and timelines realistic? Regularly monitoring progress and ROI is crucial. However, the biggest risk may be complacency. A culture of continuous learning and adaptation is required, equipping the workforce with the culture and skills to navigate the ever-evolving digital landscape.
By actively managing these risks, and by engaging in necessary ongoing learning, boards can ensure their organisations become not just tech-savvy, but also risk-savvy, effectively guiding organisations towards a successful digital future.
Neil Tinegate is non-executive director with a strategic skillset and deep expertise in digital transformation, technology, innovation and customer. He will be expanding on his views contained in this blog in a Financial Times NED Conversations event on the 14 May 2024.