:: Rethinking Risk ::
Paul Prins — 3min. read
Rethinking Risk
In the Post-digital era we find that modern technologies are often more interacting and converging. And while this ‘interconnectedness’ holds the promise of new opportunities for business, it also creates interrelated risks that may not be effectively managed.
Imagine that one of your employee’s uses a communication app – one that is not approved by the IT department – on his personal phone that is connected to the company’s database and network. While having a coffee during his break he reaches for his phone, texts with some friends and unconsciously opens a malicious link he received in one of his messages… In this potential situation one user with a mobile device can now expose a company and private information to significant security and regulatory risk.
In the paper ‘Communication and Interpretation of Risk,‘ by J. Richard Eiser of the School of Psychology at the University of Exeter in Exeter, UK (1998) risk is defined:
“Risk is traditionally defined in terms of probability. However, people often have difficulty in processing statistical information and may rely instead on simplified decision rules. Decision making under risk is also critically affected by people’s subjective assessments of benefits and costs.”
When it comes to risk management, I believe one of our biggest vulnerabilities is our ability to make good risk decisions based on the information available to us. Our decisions are often inconsistent.
As Daniel Kahneman in 1979 already proposed in his work on ‘Prospect Theory’, the way people choose between probabilistic alternatives that involve risk – based on potential value of losses or gains – risks are usually evaluated by making use of cognitive heuristics. Thus, even though we believe a human being is capable of making rational decisions, most of these decisions turn out to be more irrational.
In a relatively new book (2012) ‘Risk Intelligence: How to Live with Uncertainty‘, Dylan Evans explores the psychology, sociology, and politics of uncertainty through what he calls “risk intelligence” — the essential skill of learning the boundaries of our knowledge and using that insight in honing our humanly flawed decision-making:
“At the heart of risk intelligence lies the ability to gauge the limits of your own knowledge — to be cautious when you don’t know much, and to be confident when, by contrast, you know a lot. People with high risk intelligence tend to be on the button in doing this.
[…]
This is a vital skill to develop, as our ability to cope with uncertainty is one of the most important requirements for success in life, yet also one of the most neglected. We may not appreciate just how often we’re required to exercise it, and how much impact our ability to do so can have on our lives, and even on the whole of society.”
This may also present a challenge to CIOs and to the IT audit function. They will likely need to develop an integrated approach to risk assessment and figure out how the ‘interconnectedness’ could make sensitive data vulnerable to, for instance, cyber crime. Hence, a potential risk strategy doesn’t only involve the skill of risk intelligence but also creating a system that involves comprehensive assessments and constant risk monitoring.
…Or do you know other effective ways?
Clinkle
Over 100.000 people in line and over $25 million investments by the large players of Silicon Valley. What for? For Clinkle!
Clincke is a new mobile payment start-up that will launch its innovative application by the end of 2013. The founder behind Clinkle, the 22years old Lucas Duplan, sais: ‘We are not only launching a product, we are creating a movement’. He does not want to reveal any details on how the app will work and which type of technology it uses. Rumours go around that the app makes use of sound to transmit payment.
The app separates itself from the already existing payments apps, such as Google wallet, Bitcoin, NFC, and Square by claiming that no cards or cash are needed anymore while paying with existing currencies. They are planning to break trough with college and university students across America.
Already $25 million has been invested by the large players of silicon valley, including Google, Facebook, and even Sir Richard Branson (Founder Virgin Group) personally. Apparently they have large expectations from this application! I am excited to find out more about this application and to use it as soon as the app is live. Do you think that this new app can beat the existing payments apps available?
Angelique Nanning – 327920
Sources:
Information Strategy 
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