Living in Singapore, we often have the luxury of not worrying too much about our personal safety. However, the digital age has made our personal and corporate lives more connected to the rest of the world than ever before.
This interconnected world, though, is not as safe. Therefore, we need to understand and respond to threats on a global scale. This is not about locking everything down, but understanding these risks and protecting key assets accordingly.
CONNECTIVITY: THE GOOD AND THE BAD
The connectivity that technologies such as the Internet of Things (IoT) and social media provide is a double-edged sword - it creates new opportunities but also unprecedented risks for businesses.
Innovative start-ups have leveraged this connectivity, disrupting traditional industries with new business models at a rapid pace. In just a few years, pioneers of the "sharing economy" like Airbnb and Uber have turned the hospitality and taxi businesses on their heads.
In the past, it was unheard of to stay in a stranger's home or pay to take a ride in a stranger's car. In the digital world, it has become commonplace to trust the stranger who's renting you his room or the one driving you in his car. This trust is enabled by technology. Uber tracks its drivers, knows where you are going and gives you the ability to provide immediate feedback, perhaps making it safer than traditional taxis.
But connectivity has also made the concept of security even more complex. Being connected to others means you are as strong as your weakest link. Vulnerable connections can be exploited for attack, compromising the entire network. Companies not only need to ensure that their systems are secure, they need to be able to trust that third parties' systems are secure as well.
Top executives who fail to protect their organisations adequately from such risks are being held accountable for their failure. Case in point: in September, tech giant Yahoo confirmed that at least 500 million user accounts were victims of a cyber security breach.
As one of the largest breaches of data, the attack compromised millions of hashed passwords, telephone numbers, e-mail addresses and names of users globally.
The senior executive loses control of the organisation because there has been a breach of trust. While the ability of organisations to understand both their risk universe and vulnerabilities can sometimes be daunting, chief executive officers must make this a priority as the fallout can be tremendous.
As growing interconnectivity gives the consumer greater choice, the well-informed choose to buy from companies they can trust. It is difficult to repair that trust once broken. And in the age of social media, the damage to a brand's reputation when trust breaks down will be amplified far beyond the network of the traditional word of mouth.
TRUST UNDERPINS DATA
While data is seen as the new currency in the digital age, the ability to trust the data underpins everything. As growing interconnectivity gives the consumer greater choice, the well-informed choose to buy from companies they can trust. It is difficult to repair that trust once broken.
And in the age of social media, the damage to a brand's reputation when trust breaks down will be amplified far beyond the network of the traditional word of mouth.
To avoid such a scenario, companies need to build trust into the fabric of their operations. In fact, it should underpin how a business is organised and run. Digital trust is not simply a technology issue; it is a business issue.
Building digital trust means taking into account the opportunities as well as the risks that technology brings. It means ensuring that your ecosystem's data is secure and its systems are protected and resilient.
Managing risks in this ever-changing world needs new and dynamic approaches based on an up-to-date understanding of the threat situation. With the rapid pace of change and increasing interconnectivity in this digital age, traditional security models are no longer fit for purpose. The new mantra of digital security is "constancy". Companies need to constantly monitor and adjust their risk profiles, prioritise and protect their crown jewels, and review the digital landscape for emerging threats.
ROLE OF THE CFO
In this changing context, the chief financial officer and senior finance professionals are well placed to play a key role in building trust with external parties - they need to rise to the occasion and lead the charge.
More precisely, CFOs need to be a transformation agent to recognise that there are risks and gaps, and be prepared to act as a catalyst for the organisation, especially since they tend to be the custodians of the bulk of customer information.
CFOs should know the value of the information or data the company has and the impact of its loss. They should question key relationships and the due diligence performed over technologies used, suppliers and third parties engaged - and that includes sub-contract arrangements. This is beyond financial control; as part of the leadership team, the CFO needs to understand operational risk and be clear on the consequences should things go wrong.
On the flip side, CFOs also need to understand that not all technologies are equal. Some technologies do increase security and reduce risk. Security solutions provided by some, not all cloud providers, can help companies become more secure. The key for the C-suite is to assess the pros and cons of the technology and adopt the solution that fits their company's purpose.
Executing a strategy to transform a company for the digital age is a challenging process. It not only requires a change in the organisation's practices but the attitudes underlying them as well. It requires the right tone to be set from the top, with clear leadership that does not fear but instead understands the opportunity, and with commitment and vision from the C-suite. With that in place and the right strategy implemented, companies can build that digital trust that is so highly prized by the consumer.
Mark Jansen is Digital Trust and Technology, Media and Telecommunications Leader at PwC, and Joseph Alfred is Head of Policy and Technical at the Association of Chartered Certified Accountants Singapore.
A version of this article appeared in the print edition of The Straits Times on November 03, 2016, with the headline 'Building trust in the digital age'. Print Edition | Subscribe
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