Imagine it’s 1989, and the World Wide Web has just launched, fundamentally changing how we communicate, work and interact. Fast-forward 35 years, and we're in the Internet 4.0 era, where emerging technologies like cloud computing, artificial intelligence (AI), virtual reality and the Internet of Things (IoT) are merging digital and physical worlds. These advancements are reshaping businesses and daily life, but they also bring new risks.
Emerging technologies refer to rapidly evolving advancements that can transform industries and society by introducing unique capabilities, processes or products. However, these technologies also come with significant risks, ranging from data breaches to ethical dilemmas. This article explores eight often-overlooked risks associated with emerging technology and provides effective strategies to mitigate them.
What Are Emerging Technology Risks?
Emerging technology risks are about the uncertainties of adopting new and disruptive technologies. For example, while cloud computing offers flexibility and scalability, it also introduces risks like vendor lock-in, skill gaps and potential service outages. Unlike traditional business risks, often mitigated through established contingency plans, emerging technology risks require proactive approaches like scenario analysis and environmental scanning. They also require a higher tolerance for uncertainty, which can complicate management due to unclear ownership.
What Are the Overlooked Risks for Emerging Technology?
The risks associated with emerging technologies can be overlooked due to several factors. The situation with OpenAI’s ChatGPT serves as an example, highlighting how:
- Pace of innovation: ChatGPT’s rapid development demonstrates how technological progress can outstrip the rate at which risk assessment and regulation are established, potentially leaving gaps.
- Innovation over safety: The emphasis on innovation can overshadow potential risks, leading to a culture where safety takes a backseat to new features and capabilities.
- Limited awareness: Many users and stakeholders may not fully understand the risks of using technologies like ChatGPT, leading to complacency in adopting adequate risk management practices.
Here's a closer look at eight frequently overlooked risks related to emerging technology:
- Strategic alignment with emerging technology: When emerging technology doesn’t align with a company’s strategic goals, it can lead to poor ROI and low stakeholder buy-in. For example, a manufacturing company that installs IoT sensors to monitor equipment health without integrating them into existing maintenance strategies risks unplanned downtime, increased costs and reduced productivity.
To avoid these risks, ensure that emerging technology aligns with the company’s strategic vision. This requires choosing technology that supports business objectives and planning for change management, workforce training and adequate budget.
- Understanding of technology among leadership: When the board of directors and executive leadership lack an understanding of emerging technologies, it can impact decision-making. For example, if a board doesn't have expertise in AI, it may fail to recognize ethical issues like data privacy, bias, and misuse of AI tools, as well as potential compliance issues. This knowledge gap at the executive level can lead to inadequate risk assessment and delayed responses to technology-related risks, resulting in suboptimal decisions and increased vulnerability to various threats.
- Transformation requires the right mindset: Treating emerging technology as a tool for incremental improvement rather than business transformation can limit success. A traditional retailer embracing e-commerce, for example, needs to go beyond launching an online store by incorporating data analytics and AI for personalized marketing to realize full benefits. These changes improve the customer experience, streamline operations and open new growth opportunities. To adopt emerging technology successfully, have a transformative mindset by thinking broadly, questioning existing models and investing in meaningful change.
- Addressing skill gaps and workforce challenges: The demand for emerging technology experts is outpacing workforce skills, creating a gap. Companies lacking expertise face slower technology adoption, operational failures and increased risks. For instance, the cybersecurity sector's talent shortage makes organizations more vulnerable to cyberthreats, leading to potential data breaches and reputational damage.
Also, the emerging technology shift is displacing workers, emphasizing the need to reskill for new roles. To manage this transition, businesses should invest in employee training, promote continuous learning and focus on talent acquisition. This approach not only helps companies stay ahead in technology but also supports workforce stability by providing pathways for employees to adapt to emerging roles.
- Managing large volumes of data: Emerging technology often generates large volumes of data to support decision-making. This creates potential vulnerabilities if not managed properly. These risks include data breaches, unauthorized access, data loss and regulatory non-compliance.
Data governance, investment in secure data infrastructure and a culture of data security awareness are required for mitigation. Encrypting sensitive data, using access controls and conducting regular audits can prevent unauthorized access and data leaks. Additionally, compliance with regulations like GDPR ensures legal and ethical handling of data.
- Managing cloud concentration risk: Overreliance on a single cloud service provider, such as Microsoft's Azure, can lead to risks, including operational disruptions, compromised data and regulatory compliance issues. Companies should conduct third-party risk assessments and explore redundancy options to ensure operational continuity during a cloud outage or security breach. This approach helps safeguard against service interruptions and ensures business resilience.
- Reducing technical debt: Infrastructure readiness is essential for supporting emerging technologies, but technical debt can seriously undermine it. Technical debt is the cost of taking shortcuts in technology infrastructure, leading to outdated systems, inefficient processes and reduced scalability. This complicates the integration of emerging technologies, requiring extra time, effort and resources.
To ensure infrastructure readiness, companies must tackle technical debt. This involves creating a technology roadmap that sets long-term objectives, identifies areas of technical debt and outlines the investments needed to build the required infrastructure.
- Moving from Waterfall to Agile project management: Agile practices are essential for managing projects and risks in emerging technology. Traditional waterfall methods struggle with uncertainty, while Agile's iterative approach allows for adaptability and early risk identification. This flexibility fosters continuous improvement and keeps stakeholders engaged.
To address the overlooked risks of emerging technologies, it’s important to balance innovation with caution, using risk strategies such as scenario analysis, ongoing risk monitoring, and cross-disciplinary collaboration.
Maintain a Balanced Approach to Emerging Tech
New ideas bring exciting chances to grow, but they also bring new problems we might miss. By understanding these overlooked risks and implementing risk management strategies, companies can achieve the benefits of emerging technology while minimizing potential pitfalls. As we move further into the Internet 4.0 era, it’s crucial to maintain a balanced approach to technology adoption and risk management to ensure long-term success and resilience. That way, we can build a future where technology helps us thrive, without tripping us up along the way.