Board directors have a lot more on their list of concerns these days as our world becomes ever more complex. Until recently, matters around IT weren’t very high on the list. Until data breaches started to become more of a concern. Largely because they impacted their own liability and that is actually increasing. As Information Technology becomes ever deeply entwined in everything a business does however, board directors need to become more digitally savvy. For we now live in a “phygital” world.
What? Phygital is the combining of physical and digital. Today, a CEO or an administrative clerk can cause equally as much damage to a business in just a few seconds. From a poorly timed tweet to the leaking of corporate documents or an internal hack. A finance person can innocently think they’re fulfilling the CEO’s request for a $30,000 payment only later to find out it was a scam. A manager can sexually harass an employee via social media in the off-hours and result in a multi-million lawsuit that ends up affecting corporate policy at the board level.
Many employees today have better computers, tablets and smartphones for personal use than they’re provided in the workplace. Work files can be transferred within seconds between work and personal devices, no matter how hard IT tries to lock things down. We’ve seen many an instance of companies who use various SaaS tools then forget about them but have sensitive corporate information left on them. Sometimes for years and no one remembers who used that application hosted somewhere else.
Board directors today need to understand how people use technology, the risks inherent to the organisation they provide oversight for and be thinking two to three years ahead. Over the past three years we’ve done digital awareness presentations to a number of small and large organisations on the issues of our phygital world and how they impact board directors and corporate governance. It’s always an uncomfortable silence at the end. In every case, at least two items were added to the risk management list.
Some issues that will impact board governance in a phygital world;
- Data breach insurance
- Compliance with privacy regulations
- Cybersecurity (social engineering)
- Financial reporting and governance (fraud, theft etc.)
- Human Resources (social media liabilities, IP protection)
- Data monetization (Infonomics)
- Data Governance
- Digital Transformation (adaptation)
- Future Proofing
This isn’t bad. It’s of no fault of the directors themselves. Keeping up with the constant changes in Information Technology is a struggle even for those of us embedded in that world. What a company can do however, is find a trusted and forward thinking source to apprise their board on at least an annual basis of things they need to be aware of. This can be done working with the CEO or COO to cue up an agenda of primary risk areas or trends to develop a presentation to help educate the board.
And as more businesses seek to digitally transform (or adapt as we prefer to call it), this becomes even more important. In any business strategy today, technology is going to play a key role. And with any new deployment of a technology, there are going to be concerns. How ready is your board for the realities of our phygital world?