Saturday, April 1, 2023

Beware! Digital Transformation Has a Dark Side Too

By Anushree Bhattacharya - March 16, 2023 6 Mins Read

 Beware! Digital Transformation Has a Dark Side Too

Digital transformation strategies pressure organizations to digitalize their processes and operations quickly. While this transformation can revolutionize their business, it has its own set of dark challenges that they should watch out for.

The annual Gartner 2022 CEO and Senior Business Executive Survey shows that 80% of CEOs intended to invest in new or improved products in 2022, and their next focus was environmental sustainability. After the functional performance and business quality, sustainability was cited as the third most significant driver for digital transformation. Now, it’s time to deliver on those promises, and today, with the tremendous move toward digital transition, CEOs can use sustainability as a competitive advantage in 2023.

Even though digital technologies are designed to increase enterprises’ speed, efficiency, agility, and profitability, recent developments have revealed the unexpected dark sides of the digital world.

While most organizations have paid less attention to the negative impact of digital technologies on businesses, currently, it is a topic of growing interest on the internet.

Top Digital Risks Businesses Should Be Aware of

Whether organizations seek operational efficiency, contemporary business models, or enhanced operations, business executives should be aware of the unforeseen downside of digital transformation.

Workforce Risks

As businesses rely extensively on technology, the human element of hazards will be crucial. Organizations face data storage, network security, and talent acquisition issues as most of the current workforce is hybrid or remote during the post-covid-19 pandemic.

Also Read: How Converging Technologies can Revolutionize Businesses

Amid new digitalization-enabling technology, where it can be challenging to find skilled employees, finding a tech-skilled one is even more difficult. Skill shortages and high employee turnover are rampant. Most executives struggle to address their higher demand for flexibility in the workforce to prevent business inconsistencies. The increased chance of them acting maliciously against the company is a top concern. Employees can put organizations at risk in many ways, intentionally or unintentionally.

Internal dangers are frequently overlooked. It is because businesses trust their employees. However, employees can access private data, passwords, logins, and financial accounts. These dark digital issues are essential to address and need close monitoring to reduce organizational risks.

Cloud Risks

As more organizations adopt the cloud, this introduces several new risks daily. Architectural modifications, cloud implementation, deployment, most importantly, cloud management with current IT systems are among the frequently noted digital risks. Cloud outrages are more likely to affect new digital corporate operations. Data breaches are high-risk elements in the aftermath of digital transformation and a prominent dark side of digital transformation.

Inadequate cloud infrastructure is also a significant digital risk businesses face very often. Sometimes, companies struggle to align their objectives, and appropriate cloud architecture is required. The lack of clarity about cloud advantages and employee skill gaps is why businesses face this technology failure. Again, this is another side of transformation that needs attention to help companies overcome it. Detailed analysis and evaluation are required to avoid the risks.

Compliance Risks

Today technologies serve the best in every possible way for various industries and businesses, thus boosting the economy. Adoption of technology is not the only prize, however! The critical thing is how well these fit into the way companies operate.

Compliance risks are the evident dark side of digital transformation. It is a known yet unexpected dark side of digital that most businesses realize very later and fall into a huge loss: data production and the deployment of new technologies fuel compliance requirements. As a result, whenever a new technology is introduced, it typically necessitates the implementation of new regulations. These will dictate how companies should operate, how they set up their digital transformation strategy, and other business practices.

Organizations can quickly digitize their operations but frequently run into regulatory problems. This happens when organizations do not update the required compliance. The issue also persists due to legacy standards that play a crucial role in business operations. In these situations, firms should consider compliance factors as they convert to digital processes. It is advised to take note of all legal requirements and industry standards to fill the compliance gaps.

Automation Risks

Businesses always look for ways to benefit from automation. But, automation has some downsides apart from boosting scalability and flexibility.

Several automation solutions may introduce software incompatibilities or add redundant operational complexity. At the same time, more automation means introducing more vulnerabilities that intensify the likelihood of data breaches. There may also be several unexpected risks regarding artificial intelligence and machine learning automation. The tools may fail to predict long-term analytics for operations due to constant software updates. As a result, businesses may face operational setbacks, increased operation complexities, amplified vulnerability to cyber threats, misalignments with data & strategic goals, data loss, and other unexplored issues. Businesses need to pay heed to this dark side of digital transformation to mitigate these challenges. There could be more new challenges for businesses, so they should constantly check the automation software installed.

Data Privacy Risks

Data privacy risks are increasing as a side product of digital transformation. Businesses nowadays know the hazards, yet many fail to leverage digital capabilities to protect their data. Organizations frequently suffer severe repercussions from data breaches in terms of reputation, finances, legality, regulatory compliance, and, most crucially, customer confidence.

Although technology has greatly aided the data landscape, it has some bad news even. Inadequate data privacy measures, absence of stringent security measures, and skills gap among employees to monitor data are some of the dark sides of the digital world businesses are approaching. The misuse of automated passwords and access to data software are unanticipated threats to digitized data.

In addition, installing inadequate software and coding data on incorrect cloud platforms are also technology risks. As newer technologies are emerging to safeguard data, the tools and processes are changing rapidly. Businesses need to keep their data privacy techniques updated and clear to avoid these issues in the future.

Also Read: Just How Expensive are Data Breaches

Why are Digital Risks Even More Important than Cyber Risk Today?

Gartner, in its survey, 69% of Boards of Directors Accelerated Their Digital Business Initiatives Following COVID-19 Disruption 60% of boards of directors (BoDs) augmented their digital business initiatives due to the COVID-19 disruption. The survey aimed to understand how boards of directors perceive the emergence of the CIO’s role in their organizations and the growth of business models driven by digital technology.

That is why digital risk management is increasingly crucial for organizations now. So, how can leaders gain visibility and understanding of digital risks across the business? There are numerous approaches, but the Integrated Risk Management (IRM) strategy is an effective one. This approach is possible with the help of digital risk management technology.

More about how IRM could help companies tackle the dark side of digital transformation is coming soon. Watch this space.

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Anushree Bhattacharya

Anushree Bhattacharya is a Senior Editor with Ondot Media, covering stories on entrepreneurship, B2B business sustainability, business strategy, thought leadership, professional development, and corporate culture. She is a quality-oriented professional writer with eight years of experience writing for multiple domains for US, UK, & Europe audiences. She blends out the best of information on the trending digital transformations and pens down technology-driven stories and SEO-optimized content. For the last three years, she has been curating information-driven stories for data analytics, B2B industry trends, and associated strategic planning. With a proven understanding of the current corporate culture and B2b business world, her writing style is more inclined toward how B2B businesses want to perceive information about industry events, best practices, multiple industry insights, succession planning, customer experiences, competitive advantage, and other emerging digital transformations and developments. Her 1.5 years of experience in market research has made her a skilled content curator for major business strategy, current workplace diversity in the wake of digital transformation, changing industry trends affecting business decisions, and organizational effectiveness that’s creating a different angle for business executives to generate revenue. She crafts stories to give C-suits insights into how they can gain a competitive advantage with the help of succession planning and implement strategies to achieve maximum ROI.

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