Technological risk

Technological risk - any kind of technological uncertainty associated with dynamic and variable process or environment. The technological risk is very extensive in terms of potential effects. It contains many elements that may be included in these effects and it is influenced by growing importance of technology in today's business.

In order to reduce this risk to a minimum, it is necessary to take various safeguards aimed at minimizing the likelihood of the occurrence of the problem or minimize its effects. Usually it applies to such action, which will enable simultaneous minimizing effects and occurrence of a problem.

Main sources of technological risk

Source of risk in industrial processes are following:

• fire,
• explosion
• emission of hazardous materials.

Estimation of technological risk

To estimate the technological risk managers can use both qualitative (descriptive) and quantitative (empirical) methods.

Qualitative methods include

• risk matrix
• preliminary hazard analysis

These hazards can be divided into three groups:

• • external threat - they result from exceptionally adverse weather conditions, the proximity of routes,
  • internal threat - are the effects of technological process,
  • others - various intentional action (for example,. sabotage),
• FMEA
• what-if analysis
• safety audit review

Quantitative methods used in evaluating technological risk

• HAZOP
• FTA - failure tree analysis
• ETA - event tree analysis
• CCA - cause consequence analysis
• HRA - human reliability analysis

Examples of Technological risk

• Cyber Security Risk – Unauthorized access to an organization’s network or data by malicious actors can lead to data breaches, theft of intellectual property, disruption of operations, and financial losses.
• System Outages – System outages, due to hardware or software failure, can cause significant disruption to the operations of a business, resulting in lost productivity and lost revenue.
• Data Loss – The loss of data, either through accidental or malicious deletion, can have serious consequences for an organization, including loss of customer confidence, legal action, and financial losses.
• Technology Adoption – The adoption of new technologies, such as cloud computing, can bring both opportunities and risks. Organizations need to carefully consider the cost of adoption, the potential disruption to existing systems, and the potential security risks associated with the new technology.
• Vendor Risk – Relying on third-party vendors for technology services can introduce additional risks, such as lack of control over security and data privacy, inadequate service levels, and financial instability.

Limitations of Technological risk

Technological risk is a complex problem that has many potential limitations. These include:

• Unpredictability of technology evolution - Technology is constantly evolving and it is difficult to predict what new technologies will emerge in the future. This can make it difficult to make sound decisions based on future technology.
• Complexity of technology - Technology can be very complicated and difficult to understand. This can make it difficult for businesses to properly assess the risk associated with its deployment.
• Cost of technology - Many technologies require a high level of investment. This can limit the ability of businesses to take advantage of emerging technologies.
• Security vulnerabilities - Even the most secure technology can contain vulnerabilities that can be exploited by hackers or other malicious actors.
• Regulatory compliance - Many technologies must comply with legal and regulatory requirements. This can limit the ability of businesses to deploy certain technologies.

Other approaches related to Technological risk

• A comprehensive risk assessment: A comprehensive risk assessment should be conducted of any technology utilized in a business setting to identify potential threats, vulnerabilities, and issues that could arise from its usage.
• Risk management plan: A risk management plan should be developed to identify and address potential risks associated with technology usage. This plan should include strategies for mitigating any identified risks.
• Internal audits: Internal audits should be conducted to assess the effectiveness of the risk management plan, identify any areas of weakness and provide recommendations for improvement.
• Training and awareness: It is important for employees to understand the potential risks associated with technology and be aware of how to properly use and maintain it. Training and awareness programs should be regularly implemented to ensure that employees are knowledgeable in this area.
• Security measures: Security measures should be implemented to protect any sensitive data stored on company technology, as well as to protect against potential cyber threats.

In summary, there are multiple approaches to managing technological risk, all of which are important and should be implemented in order to ensure the safety and security of a business and its data. These approaches include conducting a comprehensive risk assessment, developing a risk management plan, conducting internal audits, providing training and awareness, and implementing security measures.

Technological risk — recommended articles

Competitive risk — Information strategy — Dynamic risk — Accident management — Technology scouting — Legal risk — Technical risk — Benefits of risk management — Computer department

References

• Hartmann, G. C., & Myers, M. B. (2003). Technical risk, product specifications, and market risk. Branscomb, Lewis M., and Philip Auerswald, Taking Technical Risks: How Innovators, Executives, and Investors Manage High Tech Risks, 30-43.