Changes in the digital world also have an impact on the risk management of companies and pose new challenges to many risk managers, but also offer new opportunities. A report on practical experiences from Martin Cerny, Finance Insurance Manager at A1 Telekom Austria AG.
The digital transformation poses major challenges to companies. The complexity, the amount of data and the speed are increasing. Risk management is therefore encouraged to use the new options for digital data flows and to continue to develop its own instruments along with technological advances.
The objective of risk management to identify threats and dangers, assess and communicate risks generally remains unchanged. Risk management and risk control plays a central role in the risk management process. The aim of this process is to change the risk situation positively by implementing measures to prevent and reduce risks. However, modern risk management also has the task of identifying opportunities and making them transparent.
Helping others to help themselves as the standard
The measures arising from the risk management process are often only taken in accordance with legal requirements and risks are transferred by taking out insurance policies. A guideline was implemented in ISO standard 31000:2018, that integrates all company divisions into risk management. This specifically involves analysing risks and opportunities from the operational processes right up to strategic management.
Digitisation in the telecommunications industry
Taking the example of telecommunications, the complexity of changing from the analogue world to the digital age can be demonstrated in a very striking manner. The telephone system was originally simple voice transmission from one location to another. Telephone networks were later used to transfer data. Telephone technology then became digital and increased in complexity. Nowadays, the exchange of information increasingly occurs between networked machines. A technical separation of networks and services is now being carried out with the introduction of IP-based networks. Thanks to increasing data transfer speeds, these networks allow for new applications such as cloud services. Lastly, virtual connections can be established in the digital network and this means that a physical connection between two communication end points is no longer required.
Digitisation ultimately leads to a transformation of value-added processes and entire value-added networks, and risk management becomes considerably more complex as a result of this.
Digitisation in risk management
Digital opportunities can be used as part of risk identification in order to work with a wider database using big data. Risk managers use machine-based real-time analyses, artificial intelligence and early warning systems to help them with the risk analysis. This is essential in a world of dynamic changes in the risk landscape. With the growth in the development of digital networks, the focus of risk management is increasingly on cyber risks, and not only in technology sectors. This is also shown by the renowned risk barometer of Allianz Global Corporate & Specialty, in which cyber incidents topped the list of the most significant business risks for the first time in 2020. There are also increasing regulatory requirements for handling data such as, for example, the EU GDPR (the basis of general data protection law since 25 May 2018).
Risk assessment also uses the numerous IT-based evaluation options such as data and predictive analysis methods. The resulting risk ratios are used in the form of reports for the decision-making process.
When it comes to managing risks, the opportunities and dangers of digitisation are closely connected. Digitisation enables identified risks to be monitored in real time and risk measures to be adapted rapidly. The complexity of digital networking, on the other hand, involves increased interactions between individual measures.
Finance Insurance Manager
A1 Telekom Austria AG
T +43 50 664 21572
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