Technology Risk and Innovation GCOR 2017

Transcription

1 Technology Risk and Innovation GCOR 2017 MIKE SCHMITT, HEAD OF TECHNOLOGY RISK MANAGEMENT BOSTON, MA 04/05/2017

2 Agenda What Is Technology? Innovation? Historical & Not-So-Historical Examples Risk Interface: Worrying Well Go-Forward Thoughts 2

3 What is Technology? Innovation? Isn t it obvious? Obligatory components of the corporate lexicon: denoting forward-looking value delivery with the connotation of modernity, ambition, efficiency, and niftiness Usefully unspecific and (potentially) deliberately ambiguous Often masks the underlying change or value creation: externally useful, internally dangerous What are these things, really? 3

4 What is Technology? Dictionary The application of scientific knowledge for practical purposes, especially in industry. "advances in computer technology" Machinery and equipment developed from the application of scientific knowledge. The branch of knowledge dealing with engineering or applied sciences. Practical That which allows people do what people cannot do themselves How to evaluate adjacencies and boundaries? SOURCE: Google 4

5 What is Innovation? Dictionary The action or process of innovating A new method, idea, product, etc. Practical A fundamental insight inciting change What accelerates or accumulates evolutionary change to the point of radical / systemic change or destruction? SOURCE: Google 5

6 Historical & Not-So-Historical Examples Going back to go forward: historical innovative technology applications What can these tell us about the future? SOURCES: See subsequent pages 6

7 Oroville Dam Taglines: The highest dam in the United States, [a] major achievement of our time. Ronald Reagan, Governor of California, May 4, 1968 Reality: Deliberately conservative implementation of theoretically wellunderstood techniques and technologies Focus Areas: scale, deceptively simple adjacencies feeding into long-tail risk Bottom Line: Are factors both in and around the technology inclusively evaluated? SOURCE: State of California 7

8 Boeing 787 Taglines: Breakthroughs, Efficiency Boeing press release, January 29, 2003 Reality: Carbon fiber-based airplane with highly electric architecture and new approach to manufacturing supply chain Focus Areas: cascading failure modes, distributed risk management in supply chain, non-linear risk impact Bottom Line: How to assess compound risk of change? A new airplane with major breakthroughs in efficiency, economics, environmental performance, exceptional comfort and convenience, e-enabled systems, and more. SOURCE: 8

9 Apple iphone Taglines: Breakthrough, Revolutionary Steve Jobs, January 9, 2007 Reality: Well-designed integration of wellunderstood pre-existing components in a massively scaled supply chain Focus Areas: ecosystem, security, data collection, privacy, supply chain Bottom Line: Innovation is often stacked evolution, particularly in technology: what s not innovative can be riskier. How to assess aggregate risk? SOURCE: Historical Apple marketing materials 9

10 Blockchain Taglines: Here s Why Blockchains Will Change the World Fortune, May 8, 2016 Reality: secure, multi-participant distributed ledger / shared database Focus Areas: encryption, models, progressive confidence Bottom Line: How to assess both technology risk and adjacencies in a disrupted environment? SOURCE: 10

11 Risk Interface: Worrying Well Systemic Decomposition: Figuring out what it actually is, filtering technology and innovation buzzwords without losing legitimate risk differentiators Ecosystem View: holistic consideration of technology and its adjacencies: implementation, use, external environment, third parties, people, process, security, geopolitics, etc. Integration with non-technology risk disciplines in structured approach aimed at identifying potential negative space Confidence Levels: Knowing enough when it s impossible to know all How will you know when you just don t know? 11

12 Go-Forward Thoughts How is risk factored into technology- and innovation-related / branded decisions at a marketing and strategy level? Or are these only captured downstream? Is management required to factor in risk, even when risk is considered novel, new, or unmeasurable? How are you disaggregating complex systems into their evolutionary components? How do you structurally and consistently filter to what it is? Are incentives in your risk process aligned with both linear and non-linear risk identification? Expected and novel risks? What risk process triggers do you have for destructive innovation? Can your risk framework and governance processes identify when they need to creatively destruct? 12

13 THANK YOU Bank of the West 180 Montgomery Street San Francisco, CA bankofthewest.com