Another Approach To Risk
Few companies greet risk with open arms; most approach it with extreme caution and intense dislike.
And only rarely can an organisation find a risk and turn it into a paying proposition. But that is exactly what some companies have done. They are putting a positive spin on disruption and making it work for them – and they’re doing it precisely with the technology that causes the disruption in the first place, like Artificial Intelligence (AI), Big Data (BD) and Data Analytics (DA). In the process, these organisations are finding ways of doing business more effectively, reaching out to a larger client base, and making better-informed decisions and better-balanced judgement calls.
Every business is subject to risk, so risk is everyone’s business; managing it effectively keeps a firm sustainable and gives it a competitive advantage, mainly because risk forces the organisation to plan ahead, and drives outcomes by identifying areas which may need attention. Relying increasingly on AI can help support existing processes, without having to stretch resources too much. Staff, too, need not fear “the robots taking over” because AI undertakes primarily onerous, repetitive tasks of the mind-numbing kind, thereby allowing real human talent to be more effectively deployed. AI can make work easier but organisations need to first have a handle on their real tech needs.
Many firms plunge headlong into the tech revolution, only to find that road unsustainable, and upon emerging – usually when they run out of funds – discover that the tech they have been using has become obsolete or was not really suited to their needs. They need to be aware that tech advantages can often be a double-edged sword. Companies should not start on comprehensive tech upgrades unless they have a comprehensive, long-term tech strategy in place, and preferably, someone with enough knowledge to drive it.
AI, BD and DA exist symbiotically; their biggest advantage is probably their ability to capture and analyse huge amounts of data rapidly. They are particularly effective in tracking consumer behaviour, can bring certain spending patterns to light, and even predict trends and tastes of certain market segments. But there are risks – such as human error – which, if they occur at the most basic programming level, could skew results or cause distortions. When these happen, the resulting damage could be irreparable, particularly where reputations are involved – hence the need to strategise carefully.
Because of time constraints and other resources that are usually invested in them, technology and innovation should always be viewed long-term, and factored into the firm’s risk appetite. There is also the psychology behind the use of technology to consider. Most people regard technology as a tool that will do their work, which is not entirely wrong. They see technology as the answer. Significantly fewer people regard technology as only an enabler, i.e. something that will help them do their work better by enhancing, not overwhelming, their skills.
As long as people expect tech to do the work, they will be held in thrall to it, and actually fear being replaced. They need to realise that tech is a tool which needs to be controlled by humans, for human empowerment – even if the pundits say that AI in the future may well enable a patient’s health to be diagnosed from a smart phone, or allow drones to deliver packages anywhere on earth through facial recognition, or even launch a personal space probe!
Many banks are jumping on the AI bandwagon with great alacrity, seeing this as a practical way to cut costs. In Australia, some banks have closed down branches, forcing customers to bank online or use their phones – something which many people are not used to. This has resulted in the banks losing customers, which they cannot afford to do, considering the current economic climate in many regions and industries. This is an example of how technology, which is intended to enhance business, became disruptive instead, and backfired badly. Can any business, in this day and age, afford to lose customers?
Perhaps the bank which closed its branches should have strategized differently, and done what a bank in the US did. Forced to replace its (human) tellers with ATMs, it made efforts to get feedback from customers on their “upgraded” banking experience. What they missed most, the customers said, was the interaction with the counter staff, and the comfortable waiting area. The bank took note, and installed seating in the ATM lobby, with a coffee vending machine, to keep their customers’ banking experience as pleasant as possible. Sometimes better technology is not the answer, at all.