Going Digital?

Going Digital?

“Digital“ is a word that has been trending nowadays. You would often find the hashtags of digitization, digitalization and digital transformation trending on LinkedIn and Twitter. But many people turn a blind eye to what difference there actually is between these terms. In hindsight, there has been a lot of confusion between these terms before, but there are subtle differences between the terms as of today.

Digital Transformation takes time; it is not achieved in an organization overnight. An integrated strategy is required for digital transformation covering the processes, operations and businesses. Extensive strategic plans are developed to support it. With digital transformations, organizations are exposed to digital risks. The existing risk frameworks are now being continuously updated and enhanced to control the risks which the organization is exposed to from introducing new digitization technologies. However, the frameworks have quite a lot of catching up to do. Therefore, it is imperative that every organization focuses on digital risk management, as digital risk is as much a business problem as it is an IT issue

So What Indeed Is Digital Risk?

With this in mind, we could explore what digital risk is. Digital risk is the risk involved in digital business or processes. Another way of understanding Digital Risk is the events which could cause a disruption of business continuity concerned with the digital realm. Most of this is covered by IT systems, databases and connectivity to the Internet. Breaking down Digital Risk into its constituents is contentious as different organizations have their own interpretations and priorities. Since we can think of so many types of events that could be categorized in Digital Risk, viewing Digital Risk as a whole can be overwhelming. Thus, the general practice is to classify it into components for a specific yet overall comprehensive understanding. And to create frameworks for effective management to reduce the impact of these risk-events on the business continuity, if not eliminate it.

There are different ways which we could classify the components of Digital Risk. One method could be categorizing the risks in terms of cyber, physical and reputation. Another could be by processes, governance, data and technology. The aim is to create a framework with classifications that are as mutually exclusive and collectively exhaustive as possible. At the same time, there are factors which need to be given more attention (for instance, the cloud) owing to the dynamic nature of our digital ecosystem. Thus, one could argue that an overlap between the components is inevitable. Based on the overall inferences garnered from this approach, the components of digital risk have been identified as follows:

Components

In this digital age, digital risk management (DRM) cannot be overlooked by any organization. This should be made a priority by the management teams, with the dawn of the impeding digital transformation. Digital Risk, like all risks, cannot be completely eliminated. But the impact of these risk events, which are ever increasing in businesses with time, can be mitigated with effective DRM. There are many incidents in the past which have made organizations aware of the controls that were needed to be placed on events which tremendously affected their business, for instance, a cyber breach or ineffective data management measures. Looking at them retrospectively, the loss incurred by those organizations, could have been reduced by placing appropriate controls, which is an integral part of DRM. Moreover, an effective DRM can also be leveraged to buy cyber insurance for your business. Now the question that remains to be asked is, “Why not pay more attention to digital risk“?

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