5 tips for digital transformation

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Reimagining business for the digital age is the number-one priority for many of today's top executives. We offer practical advice and examples of how to do it right.

We keep hearing about how digital transformation and "disruptive innovation" are vital for the future competitiveness of businesses -- and indeed, for many companies, they are. But they're also among the biggest risks organizations are facing, according to a new report from global consulting firm Protiviti and North Carolina State University.

In fact, issues related to the advancement of technology now outpace economic uncertainty and regulation as the top concerns for companies heading into 2018, the study said. The rapid pace of technological developments, along with organizational resistance to change, are the biggest concerns among boards of directors and business leaders around the world.

The report, the sixth-annual Executive perspectives on top risks survey by Protiviti and the Enterprise Risk Management Initiative at N.C. State's Poole College of Management, assesses the concerns of 728 board members and executives worldwide.

The mounting concerns about disruptive innovation significantly exceed fears about economic uncertainty and regulatory scrutiny, which have consistently been the top risk issues of board members and executives over the past several years, the report said.

Threats related to cyber security are a top risk area for business leaders as well, the study said, particularly in light of recent incidents such as the WannaCry ransomware attack and the data breaches affecting organizations such as Equifax. Of particular note is the fact that board members across all industries perceive a much riskier environment in 2018 compared with 2017.

"Disruption and digital transformation are taking place across all industries and threatening core business models," said Pat Scott, an executive vice president with Protiviti. "It's clear from our latest survey that there has been a major shift in the top concerns for organizations."

Board members and executives are worried that new technologies and their impact on established business models could outpace their organizations' ability to keep up and remain competitive, Scott said.

The report ranks the top 10 risks organizations will face in 2018:

Rapid speed of disruptive innovations and/or new technologies might outpace organizations' ability to compete and/or manage the risk appropriately, without making significant changes to business models.
Resistance to change might restrict organizations from making necessary adjustments to the business model and core operations.
Organizations might not be sufficiently prepared to manage cyber threats.
Regulatory changes and regulatory scrutiny might increase.
Organizations' culture might not sufficiently encourage the timely identification and escalation of risk issues.
Organizations' succession challenges and ability to attract and retain top talent might limit their ability to achieve operational targets.
Ensuring privacy/identity management and information security/system protection might require significant resources.
Economic conditions in the markets currently served might significantly restrict growth opportunities.
Inability to use data analytics and big data to achieve market intelligence and increase productivity and efficiency might significantly affect management of core operations and strategic plans.
Organizations' existing operations might not be able to meet performance expectations related to quality, time to market, cost and innovation, and competitors, especially new competitors that are "born digital" and with a low-cost base for their operations.