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Volume 32, Issue 2

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Wednesday, 01 May 2019 14:29

Why Digitally Fit Internal Audit & Compliance Functions are Vital for the Fourth Industrial Revolution

When we walk into our homes, we can ask our voice assistants to turn the lights on, use our faces to unlock doors and monitor our home cameras on our phones. When we travel, the planes we take now include connected blockchain-based parts that regularly alert crews for vital maintenance. Brought on by the Fourth Industrial Revolution (4IR), smart, connected technologies are helping make life easier, faster and more convenient, because they can significantly boost the intelligence and reach of one digital technology alone. However, blended artificial intelligence (AI), internet of things (IoT), blockchain and other 4IR technologies also bring infinite entry points for risk.

Imagine, for instance, how many companies are using AI for analytics that improve with use. But data errors, or bias in software or models, can misinform decisions and bring unforeseen accidents. AI-related risks have ranged from public pushback on the use of AI-based surveillance cameras, to software glitches that led to self-driving car crashes. Add to this list evolving regulations in areas like data privacy, and missed risks can be costly. A 2018 report by the Ponemon Institute estimates noncompliance costs to be 2.7 times the cost of maintaining or meeting compliance requirements — up 45 percent since 2011.

While companies race to digitally transform themselves and realize the full potential of 4IR technologies, we should pause to consider how companies can best navigate the immense risk that these blended technologies bring.