Cisco speaks at Hong Kong StrategicRISK event and warns that many firms will be disrupted if they fail to embrace the Internet of Things
Companies that fail to monetise the Internet of Things (IoT) will be disrupted, risk professionals heard at a StrategicRISK event in Hong Kong last week.
The IoT is the network of physical objects, embedded with sensors and connectivity, that can collect and exchange data. Research firm Gartner predicts that there will be about 50 billion devices connected to the internet by 2020.
But Cisco global head of market development, Internet of Things, Matthew Smith said that while companies understand the shift to digital is important, many still don’t have a plan to address it.
“We predict that 50% of Fortune 500 companies will fail to embrace the Internet of Things in the next five years,” he said at the event.
“If you don’t start to think about monetizing this connectivity, if you just create a fortress around all of the data that you collect, you’re going to be disrupted. Because disruption is the name of the game here and things are moving so quickly.”
Indeed, 60% of the audience of risk managers and insurance brokers said the IoT would have the greatest impact on their business in the next two years. This was followed by automation (37%), blockchain technology (14%) and artificial intelligence (9%).
The StrategicRISK event looked at the role of risk management in markets that are facing the risk of disruption.
More than two-thirds (68%) of the audience said ‘failure to innovate’ or ‘disruption risk’ was on their company’s risk register. And more than half (56%) were ‘very concerned’ about the threat of disruptors to their business’s future success.
This was a figure that did not surprise Lockton Asia-Pacific former managing director Greg McCoy.
He said: “The fear factor around disruptive innovation is huge, and it shouldn’t be. It’s predominantly beneficial.
“The ability to leverage Big Data and analytics to develop an integrated view of customer activities and business operations will provide competitive differentiation to companies across industries.”
McCoy said risk managers were concerned about the uncertainty of outcomes and pace of change caused by disruptive innovation.
“You have to understand the cross-sectoral nature of disruptive innovation. The expanse and the impact that these innovations can have across not only your business model but your customers’, your partners’ and your supply chains’ business models, can be enormous.
“The biggest challenge as a risk manager is not necessarily to manage that risk, it’s more about identifying what are the implications and repercussions of it and constantly revising your risk retention and appetite strategies to manage that change,” he said.
“Risk management should be a partner to innovation, not an inhibitor.”
Critical to managing the change will be rise chief digital officers and chief innovation officers.
Smith said: “This is someone who can sit on top of this massive disruption within the industry, have a Switzerland view of things, know where technology is going, and manage the different silos within companies.”
Risk management cheat sheet for managing innovation
Source: Harvard Business Review
- Start small before a full-fledged launch
- Provide a stable organisational context
- Centralize knowledge base and oversight and assign a senior project leader
- Use rigorous project management and seasoned project leaders
- Appoint a lead site
- Invest time defining the innovation
- Allocate resources on the basis of capability, not availability
- Build enough knowledge overlap for collaboration
- Limit the number of sub-contractors and partners
- Don’t rely solely on technology for communication