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Hi, enjoy this weeks curated risk and business updates.
Going forward, our news coverage and editorial discussions will provide increased focus on key technology trends that all organizations need to consider in identifying emerging risks and trends. Last week we covered five of those trends, below are the next five trends we will focus on in 2024.
Autonomous Vehicles: the ongoing pursuit to perfect autonomous vehicles continues in 2024 Key advancements include clearer regulatory guidance, rapid advancements in AI and machine learning, better sensing capabilities, faster communication networks, improved cybersecurity and data privacy protections and increased public/ private collaborations.
Sustainable Technology: The rapid increase of electricity to power AI will lead to increased focus on more efficient AI models as well as alternative approaches to reduce the impact of technology's consumption of energy and water resources. Constellation Energy believes AI’s demand for power in the U.S. could be five to six times the total amount needed in the future to charge America’s electric vehicles.” Gartner projects that “25% of CIO’s compensation will be linked to their sustainable technology” by 2027.
Cloud Computing: Companies will continue to manage the growing costs, reduce risks and create future flexibility by adopting strategies and architectures that support a multi-vendor approach. Edge computing will grow to improve performance, serverless computing will reduce the need for developers to manage servers and cloud platforms will become more industry specific, increasing value through pre-packaged capabilities, tools and data architectures. Cloud-native malware emerges that targets cloud misconfigurations, access controls, and other vulnerabilities.
Augmented Reality and Virtual Reality systems continue to mature and recapture interest in the marketplace. On the consumer front, Apple’s Vision Pro, Quest 3 headsets from Meta and Ray-Ban smartglasses have helped reignite interest. Corporations are adopting AR/VR systems for training, compliance and operational improvements. IDC expects AR headset shipments to grow by 84% in 2024. Privacy issues, cybersecurity concerns, health and safety issues and content management challenges remain unsolved, while regulatory frameworks are still immature.
Robotics takes a leap forward with increased AI integration to learn, perform more difficult tasks and make more autonomous decisions. Improved sensors, AI, vision and gripping technology allows for more close cooperation and interactions between humans and robots, giving rise to more reliance on collaborative robots called “cobots”. Skilled labor shortages and wage increases ensure that cobots and other robotics become a new fixture in the work-place.
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As a reminder, here are our Risk Universe categories that we leverage to tackle and understand risk which include:
External Risk
Governance Risk
Strategic Risk
Product Risk
Business Operations Risk
Legal & Compliance Risk
Financial Risk
Technology Risk
These high-level risks are fairly consistent between different companies and risk profiles.
We leverage our understanding of risk maps and risk universes to better advise our clients in strategic business decisions and to optimize the management of risk throughout the enterprise.
Weighing the Risks
Weekly Highlights
Hope could be restored for those fearing the negative effects of AI on the job market as experts see opportunity for job creation around AI and how AI can complement employees potential rather than remove it
Ethical and governance concerns over AI are stirring interested parties to action but in a disconnected manner — effective governance guidelines formulated in a coherent and cooperative manner could leapfrog the efficacy of AI use and ease concerns over AI pitfalls
Examination of global supply chains while under duress in the Red Sea may prompt businesses to assess the transparency, or lack thereof, of their supply chains and how organizations can be prepare for global disruptions
Risk Universe Weekly Updates
Governance Risk
AI can restore the jobs that automation and globalization killed, a report says
Rather than completely removing chunks of the job market, the implementation of AI into organizations may shift jobs around these new technologies similar to the introduction of computers into the business world in the 1970s
HR and other organizational managers should work to avoid talent disruption by preparing potentially affected employees on how to best complement their work with AI tools and frameworks
Pillars of AI Governance with Fern Halper
Key AI governance pillars are necessary to best use AI in both an effective and ethical manner and are listed by Halper:
Trustworthiness
Transparency
Performance
Protection and privacy
Safety
Ethics
As the field of AI ethics and governance develops it is important for managers to continuously monitor research and best practices to implement into their work streams
Strategic Risk
A slow year in M&A activity in 2023 after hot years in 2021 and 2022 have investors and market participants hesitant despite a knockout year in public equities
Inflation, higher interest rates, among other factors persuaded private equity investors to stay their hand in terms of transactions but acceleration in cutting-edge technologies like AI could move the needle and reignite M&A activity
Business Operations Risk
The Power of a Business-Integrated Risk Management Approach
In today’s global age of business, there are a multitude of conflicting or intersecting interests and business lines within one organization, this can create tension and diminish the efficacy of strategic goals
Enterprise Risk Management programs help categorize, predict, and mitigate risk, while examining organizations on both micro and macro scales, and inform managers how to respond to risk in real time
It is crucial that organizations implement formal Enterprise Risk Management programs which help managers to understand origin points of key risks and the owners (those responsible for affected areas) of discrete risks to best mitigate the inherent risk of running a multi-faceted business
Red Sea Tensions: Impact On Global Trade, Retail, And Manufacturing
Recent trade disruptions on the Red Sea coming as a result of geopolitical tensions have highlighted global supply chain deficiencies and disproportionately have affected aerospace and manufacturing companies
Organizations with global supply chains should audit their supply chains to mitigate risk downstream in their business operations
Legal & Compliance Risk
Big Tech AI infrastructure tie-ups set for deeper scrutiny, says EU antitrust chief
AI regulations continue to develop as concerns over the developing technology and antitrust concerns emerge, regulators will actively monitor AI transactions to prevent antitrust concerns
There are further questions as to how these AI models will be trained and with what data “clusters”, previous models have used open source data, this method may be discontinued going forward due to changing regulation and data privacy concerns in the EU
Executive teams and those managing new technology implementation should monitor the status of potential regulatory changes to best avoid technologies that could be adversely affected
Technology Risk
A Venture Capitalist’s View of AI: Where the Money Is
A key concern in the pursuit of effectively leveraging AI is the development of a measured unifying strategy and governance surrounding AI on an international scale as the technology develops further, currently most interested parties are working in a disconnected manner which leaves the potential for unrealized gains
Advocates for intense AI regulation should consider that heavily restrictive regulatory guidelines occurring too soon could stifle innovation and diminish growth potential for organizations using AI and AI companies themselves