Technology Risk
Contents
Full Title or Meme
The page is about the risk that Technology creates to the entire human ecosystem as it advances.
Context
New risks created by new technologies are not new. As steam power rose in importance, the need for human power dwindled. The disruptions to the working population rose and fell as each wave of technology was absorbed by the human Ecosystem. Unfortunately it seems that the rate of technology change continues to accelerate, making it increasingly difficult for humans to adapt.
Problems
This enumeration of the problems originated with Peter Neumann[1]
- Using technology to solve problems that are not inherently technological, like Bitcoin and other crypto assets to avoid the use of existing financial organizations that increasingly seem disconnected from the needs of their customers.
Technology
Many of the risk factors arise because management is not equipped to deal with the rapid changes in technology and the impact that can have on business operations and customer expectations. For example both Google and Microsoft issued warnings in their recent filings on the risk that bad outcomes are highly likely as Artificial Intelligence becomes an increasingly large component of their operations.[2]
Privacy
For example, since the 2016 US presidential election Facebook has been called on the carpet in several countries for numerous privacy lapses that continue to grow.[3][4] When Facebook reported that 3 million users in Europe had abandoned them it lost $120 Billion in market value and the stock has continued to lose value throughout 2018.[5] The loss to Equifax market cap after their privacy breach is more that 30% with some experts doubting that the company can continue in existence after all the legal cases are settled.[6]
Financial Innovation
The major culprit of the recent Great Recession has been blamed on new financial instruments. Even before that occurrence both Arthur Anderson and Enron were eliminated from their place as admired companies and ceased operation after discoveries of how the manipulated energy futures. This was an existential legal risk in their case, but there was substantial cost to their reputation even before they ceased operations.
Solutions
- Changing corporate habits can be difficult unless the CEO of the Enterprise makes and enforces a commitment to treating the employee and the customer with respect. [7]
- Large accounting firms have all started “Conduct Risk” practices due to the growing demand, but also to the expectation of continued pressure from regulatory bodies to assure that Enterprises are positioned to absorb the costs of unsafe behavior.
- The best solution would be for financial disclosure documentation to require the inclusion of a conduct risk assessment in every mandated disclosure, with privacy risk as a component of that section. This procedure will never anticipate changes brought about by radically new technologies, but it will require inclusion of risks as they are recognized. Large numbers of shareholder suits are based on misleading the investors on the risk of behavior.[8]
- In Germany the boards are required to have representatives of the community and labor unions. This assures that there is some input as to the Common Good of the community and the workers at the company.
References
- ↑ Peter Neumann, Computer-Related Risks and Remediation Challenges CACM 66 No. 6 (2023-06)
- ↑ Tom Simonite, Google and Microsoft Warn That AI May Do Dumb Things. (2019-02-19) Wired Magazine https://www.wired.com/story/google-microsoft-warn-ai-may-do-dumb-things
- ↑ Kevin Roose, No gentile Giant, But a Juggernaut Playing Hardball. (2018-12-06) p. B1 New York Times
- ↑ Adam Satariano +1, Leveraging User Data To Show Favoritism Among Its partners. (2018-12-06) p. B1 New York Times
- ↑ Over $119bn wiped off Facebook's market cap after growth shock. The Guardian https://www.theguardian.com/technology/2018/jul/26/facebook-market-cap-falls-109bn-dollars-after-growth-shock
- ↑ Equifax’s stock has fallen 31% since breach disclosure, erasing $5 billion in market cap. (2017-09-14) Market Watch https://www.marketwatch.com/story/equifaxs-stock-has-fallen-31-since-breach-disclosure-erasing-5-billion-in-market-cap-2017-09-14
- ↑ Time magazine special report on Habits
- ↑ Brendan Pierson, Former Exxon CEO Rex Tillerson testifies in climate change fraud trial Reuters (2019-10-30) https://www.reuters.com/article/us-exxon-mobil-lawsuit/former-exxon-chief-rex-tillerson-to-testify-in-climate-change-fraud-trial-idUSKBN1X912M
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