Digital transformation offers real and tangible advantages but has concurrently catalyzed the prevailing risks to transform in complexity and to grow. This has transformed the way risks manifest and impact any organization, says the cover story ‘Risk Management for the Digital Economy’, in the February issue of Banking Frontiers. It says the business strategy now has an additional dimension to consider – the company’s level of preparedness for digital transformation. The speed of innovations may outpace organization’s ability to sustain and respond to the change.
Sanjay Mishra, chief risk officer HDFC ERGO General Insurance explained: “The cost involved includes re-building or converting existing IT infrastructure to change without disturbing customer expectations is the cost risk faced by the company. Frauds and fraudsters have turned tech savvy and execute complex frauds by leveraging loopholes in the system.”
Another CRO, Ripujit Chaudhuri of ICICI Securities, says: “With digital transformation, the scale of businesses has significantly expanded and hence, in case of a system issue, the impact is felt across a wider segment of users resulting in the likelihood of a contagion effect. Also, with the help of technology, businesses are able to operate with finer safety margins resulting in exposure to higher risk in case of a failure.”
Venkata Jayaraman, chief risk officer at Fincare Small Finance Bank, feels banks can focus on RPA, AI and cloud-based solutions as potential cost saving strategies, “but the unknown cyber space and attendant risk is ever expanding – as we may reduce costs in one area, there is going to be continuous increase in skilled resources requirement.”
