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Half of digital business to suffer major service failure by 2020: Gartner

Half of digital business to suffer major service failure by 2020: Gartner

2015 will see the emergence of digital risk and the digital risk officer

More than half of digital businesses will suffer major service failures by 2020, due to the inability of IT security teams to manage digital risk in new technology, according to Gartner.

Gartner has named digital risk management as the next evolution in enterprise risk and security for digital businesses by expanding the scope of technologies protected.

IT, operational technology, the Internet of Things and physical security technologies will have interdependencies that require a risk-based approach to governance and management.

Gartner analysts predict more than half of CEOs will have a senior "digital" leader role in their staff by the end of 2015, according to the 2014 CEO and Senior Executive Survey by Gartner.

Gartner said that by 2017, one-third of large enterprises engaging in digital business models and activities will also have a digital risk officer (DRO) role or equivalent.

Gartner vice president and distinguished analyst, Paul Proctor, said digital risk officers would require a mix of business acumen and understanding with sufficient technical knowledge to assess and make recommendations for appropriately addressing digital business risk.

"Many traditional security officers will change their titles to digital risk and security officers, but without material change in their scope, mandate, and skills they will not fulfill this role in its entirety."

However, the mandate and scope of a DRO is very different than a chief information security officer.

"In many organisations the CISO role will continue with similar scope as in 2014," according to a Gartner statement.

Read more: Analysis: Channel of rapid change

"The DRO will report to a senior executive role outside of IT such as the chief risk officer, chief digital officer or the chief operating officer.

"They will manage risk at an executive level across digital business units working directly with peers in legal, privacy, compliance, digital marketing, digital sales and digital operations.

The impact of this new structure of digital risk governance and management on IT and IT security operations is expected to be minimal, particularly in those enterprises that have already appointed a chief risk officer.

However, the potential impact on the culture of IT and IT security teams is major, according to Gartner.

Read more: Analysis: Hyped or not, Data 2.0 kicks in

"IT, the Internet of Things and physical security form a new super-set of technology that challenges the ability of existing organisational structures, skill sets and tools to consistently and adequately assess, define and manage technology risks," a Gartner statement said.

"Simply expanding the portfolio of the existing IT security team to include technology risk for all internet-aware technology is not viable.

Proctor said a consistent, unified approach to digital risk at the enterprise level had the potential to deliver cost efficiencies and greater risk assurance for business processes than the fragmented approach currently in place at most enterprises.

"Development of a digital risk management capability requires deconstruction and re-engineering of current organisational structures and allocations of responsibility as well as the development of new capabilities in security and risk assessment, monitoring, analysis and control.

Read more: Microsoft announces raft of new alliances and Cloud offerings at TechEd

By 2019, the new digital risk concept will become the default approach for technology risk management, Proctor said.

"Digital risk officers will influence governance, oversight and decision making related to digital business.

"This role will explicitly work with non-IT executives in various capacities to better understand digital business risk and facilitate a balance between the needs to protect the organization and the needs to run the business.

"However, the cultural gap between IT and non-IT decision makers presents a significant challenge. Many executives believe technology — and therefore technology-related risk — is a technical problem, handled by technical people, buried in IT.

"If this gap is not bridged effectively, technology and consequent business risk will hit inappropriate levels and there will be no visibility or governance process to check this risk."

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Tags GartnerInternet of Things (IoT)digital risk managementGartner vice president and distinguished analystPaul Proctordigital risk officer

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