Navigating the Evolving Business Landscape: The Promise and Peril of Emerging Technologies

As the business environment transforms at an unprecedented pace, organizations face a plethora of challenges. From evolving stakeholder expectations to tumultuous economic conditions and increasing regulatory complexities, companies often find themselves navigating unpredictable waters. The COVID-19 pandemic has further underscored the need for adaptability, pushing firms to rethink their operational strategies and embrace innovation.

The Role of Emerging Technologies

In attempts to maintain competitiveness, many businesses are looking towards emerging technologies. According to the ISACA’s survey titled “The Pulse: Emerging Technology 2021,” these technologies have the potential to disrupt established markets by addressing pressing issues. However, the adoption of these innovations comes with its own set of challenges that must be evaluated alongside potential benefits.

Benefits of Emerging Technologies

A prime example of an emerging technology is Artificial Intelligence (AI). This broad category encompasses various facets, including machine learning, natural language processing, and speech recognition. Notably, nearly 50% of the respondents in the ISACA survey reported current usage of AI technologies (22%) or are in the stages of planning and piloting (27%).

Companies adopting technologies like AI anticipate significant competitive advantages, such as enhanced operational efficiency and improved customer experiences. By streamlining processes and innovating products, businesses can realize cost savings and higher revenues.

To effectively embrace emerging technologies, organizations can facilitate broader investment across departments while ensuring accountability rests with process owners. This focus on ownership empowers teams to directly tackle unique business challenges, yielding operational efficiencies and superior quality in analysis.

Moreover, internal audit functions can leverage AI technologies to bolster risk monitoring and improve control effectiveness. For instance, machine learning can sift through general ledger data to identify erroneous or fraudulent journal entries among vast transaction sets. More complex and impactful problems may necessitate collaboration with data scientists, either internal or as consultants, to ensure a thorough approach.

Risks of Emerging Technologies

While the benefits of emerging technologies are enticing, businesses must remain vigilant regarding associated risks. The ISACA survey found that respondents generally rated the risks of AI as low (30%) or medium (33%), with only 9% viewing it as a high-risk endeavor. Understanding the maturity and complexity of business processes that utilize AI is essential in assessing actual risks.

Managing Expectations

A notable risk is the potential mismatch between the anticipated and actual outcomes of these technologies. To mitigate this, organizations should establish clear visions underpinned by defined objectives and realistic expectations. Conducting due diligence through extensive research can illuminate project requirements that have significant implications.

An effective IT governance framework is crucial as emerging technologies are integrated. This includes input from diverse IT groups encompassing application development, security, and infrastructure. Such collaboration ensures comprehensive communication throughout the organization and enables the identification of additional needs, streamlining project implementation. Regular monitoring and updates to senior leadership are vital in gauging whether a return on investment (ROI) aligns with expectations.

Regulatory Challenges

Changing regulations represent another risk that can stifle the success of emerging technologies. Privacy laws governing consumer data collection can hinder a company’s ability to utilize certain technologies effectively. New regulations—particularly those focusing on algorithmic bias—are on the horizon, making ongoing surveillance over compliance vital. Adopting agile development processes can help organizations adapt to new rules and ensure compliance remains integral to operational strategies.

Technical Accidents

Moreover, technology misconfigurations can lead to significant algorithmic errors, jeopardizing data quality and security. Implementing robust change management procedures can effectively mitigate these issues, warranting that test cases are properly designed and executed, version controls are meticulously maintained, and peer reviews of coding and model adjustments are conducted. In the formative stages of planning and development, it’s imperative to scrutinize data sets to identify any potential biases or ethical concerns.

Organizations that dive into emerging technologies can access substantial competitive benefits; however, these are not free from risk. Process owners should adopt a proactive stance to identify potential pitfalls by engaging with internal audit or enterprise risk management teams. Early discussions about prospective risks and controls can reveal overlooked issues, ensuring the successful integration of these technological innovations.

About the Author
Jacob Young, CISA, is a senior IT auditor at Protective Life Insurance Company, specializing in IT audits of application development, infrastructure, operations, and cybersecurity. His expertise extends to aiding financial and operational audit teams in data analytics initiatives. Jacob currently serves on the board of directors for the ISACA Birmingham Chapter and contributes to the ISACA Now Blog, drawing from experience gained through external auditing across various sectors, including financial services, manufacturing, and nonprofit organizations.