AMIT RAY · 2017-03-28 · An innovation that creates a new market by applying a different set of...
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Transcript of AMIT RAY · 2017-03-28 · An innovation that creates a new market by applying a different set of...
AMIT RAY
Managing Director, Protiviti
RISK OF DISRUPTIVE TECHNOLOGIES
DISRUPTIVE TECHNOLOGY
Top Technology Trends in 2017
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Gartner’s Hype Cycle for Emerging Technologies
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An innovation that creates a new market by applying a different set of values, which ultimately (and unexpectedly) overtakes an existing market.
• Radically transforms markets • Creates new markets and business models • Destroys existing markets and value networks • Creates significant societal impact
WHAT
• Low-End Disruption: The new products or services are cheaper, simpler, smaller, or easier to use.
• New-Market Disruption: They address untapped or unobserved customer needs that are being ignored in the mainstream
WHY
Demystifying Disruptive Technology
HOW
How Disruptive Innovation Works
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The Disruptors
World’s largest taxi company owns no taxis
World’s largest accommodation provider owns no real estate
Largest communications companies own no infrastructure
World’s most valuable retailer has no inventory
Most popular media platform creates no content
Fastest-growing banks actually have no money
World’s largest movie house owns no cinemas
Largest software vendors don’t write the apps
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DISRUPTIONS IN ENERGY INDUSTRY
# 1 - Disruption in Energy Industry
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# 1 - Disruption in Energy Industry
2013 Consumer Reports:
Best car EVER!
Best-selling high-end large luxury car in
America for 4 years in a row!
# 1
# 2
# 3
# 4
# 5 0
25
50
75
100
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2017 Best Cars of the Year (Luxury Sedan Category)
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Key ‘Drivers’
Self Driving Vehicles
Solar Electric Vehicles
Energy Storage
Disruptors in Energy
Industry
Is EV Disruptive?
0% 100%
17 – 21 %
Internal Combustion Engine
90 – 95 %
Electric Motor
1. Electric Motor – more Energy Efficient 5X
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Is EV Disruptive?
2. EVs are cheaper to charge / fuel
Assumptions: 12,000 miles/year Tesla Roadster 4.6 miles per kWh Ave Rental electricity in the US : 12cents/kWh 5 year-cost = (60,000 miles * 0.12 $/kWh)/4.6 miles/kWh = $1,565
• It costs $15,000 to fill up a (gas) Jeep Liberty
over five years (Consumer Reports)
• An Electric Jeep Liberty would cost $1,565 in
electricity
• Improvements in power electronics will increase 10X
10X
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Is EV Disruptive?
3. EVs : fewer Moving Parts
ICE (Gas) Vehicle
2,000+ moving parts
Electric Vehicle (EV)
18 moving parts
Transmission, driveshaft, clutch, valves, differentials, pistons, gears, carburetors, crankshafts,…
EVs are 10X – 100X cheaper to maintain!
Tesla : Infinite Mile Warranty!
100X
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Is EV Disruptive?
The Tesla P90D accelerates faster than $1 million gas ‘supercars’ from Ferrari, McLaren, Lamborghini, Paggani and Porsche
4. EVs are FAR MORE powerful than ICE
Disrupt the Basis of Competition
EVs : Porsche performance for Buick Prices!
High $$$
Medium $$
Low $
Price
Low High Performance
Buick Enclave
Tesla Model 3
Porsche 911 Carrera
EVs Shift the Price / Performance equation
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End of Oil by 2030?
• Ford to invest US $4.5B in EV, just invested 1B in a self driving car company
• FoxConn to build EV for US $15,000
• Apple, Uber and Google have entered the market
• Ecosystem: Free EV Charging Stations
Cost of EV with 200-mile (320 Km) range
Assumptions: 4 miles/kWh, 50kWh batteries, 16% yearly improvement in battery costs, EV costs= 3X cost of battery
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10000
20000
30000
40000
50000
60000
70000
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2014 2015 2017 2019 2021 2023 2025 2027 2029
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st o
f El
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Gas “Affordable SUV”: $35 - $40K
Avg. gas car cost in US : $31K
Avg. cost of Low-end gas car in US: $22K
2018 2020 2022 2024 2026 2028 2014 2016 2030
#2 - The Fracking Revolution
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The Shale Gale
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The Tip of the Iceberg
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MANAGING EMERGING RISKS
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Defining Emerging Risks
A risk is emerging when the understanding of one or more constituent elements of the risk’s current dynamics is not developed.
HIGH UNCERTAINTY
• Lack of knowledge of potential impacts
• Inexperience in risk absorbing systems
Example
Possible interactions with existing technologies along with mitigation tactics are unknown or unproven and lead to open exposures, e.g., nanotechnology
INCREASING COMPLEXITY
• Non-Linear impacts due to systemic dependencies
• Lack of knowledge on interconnection and dependency on risk
Example
An accumulation of risks in the industrial internet of things such as automation, robotics, machine to machine communications.
CHANGES IN CONTEXT
• Changes in nature and probability of expected impacts from existing technology, products and processes
Example
How aviation deals with drones.
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Contributing Factors to Emerging Risks
Scientific Unknowns Time Horizon Complications
Social Dynamics
Technological Advances Conflicts over science,
values and interests
Malicious Motives and acts
Communication
Information asymmetries
Systems that amplify change
Loss of safety margins
Varying susceptibilities to risk
Perverse Incentives
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Why Traditional Approaches Fail
Tendency to rely too heavily, or ‘anchor’ on a past reference or on one trait or piece of information when making decisions
Anchoring
Likelihood of an alternative is judged depending on how
easily it is imagined or brought to mind
Availability Bias
Tendency to search for or interpret
information in a way that confirms one’s
preconceptions
Confirmation Bias
The fact that people often demand much more to give up an
object than they would be willing to
pay to acquire it
Endowment Effect
Tendency to select inconsistent choices, depending on how a question is framed
Framing Effects
Tendency to see past events as being
predictable at the time those events
happened (‘I knew it all along’)
Hindsight Bias
Tendency to be over-optimistic,
overestimating favorable and pleasing
outcomes
Over-Optimism
Excessive confidence in one’s own answers
to questions
Overconfidence
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Adaptive Risk Management
Macro: Identify potential scenarios from Innovators , Structural Risk
Micro: Monitor visible Risk, Amplifying tremors (Signals from Early Adopters)
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Harness Social Intelligence to identify emerging risks
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Tipping Point Dynamics and 3 Stages of Risk
Intensity
Time
Control
Stakes
TIME TO ACT
OPTIMAL TYPICAL
Invisible / Potential Visible and Amplifying
Hidden Risk Emerging Risk
Crisis
Innovators Early Adopters
Early Majority
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Look Far enough into the future and use scenario analysis
Strategy
Information technology
Human Resources
Legal and Compliance
Accounts Payable, general ledger accounting, tax accounting
Product
Management
Actuarial
Analysis
Marketing
Sales and Agency Management
Risk Management and Under- writing
Policy Acquisition & Servicing
Billing and Account Receivables
Claim Services
Investment Management
Loss Control
Consider top-down and bottom-up impact
Consider if risks are embedded in the undertaking’s culture
Make sure the Key risks have owners and action plans
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Analytics Driven Risk Management
Big Data
Emerging thinking
‘Connect the dots’
Process Analytics
Outside the Box
Exte
rnal
Dat
a
Inte
rnal
Dat
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Generating Hypothesis Testing and Monitoring Hypothesis
What if you could leverage ‘seed-thoughts’ of scientific/legal specialists, and general populace, to identify new potential sources of risk?
What if you could track the relevant indicators of the most important external threats to your business, to access when they are live?
What is you could leverage the collective thoughts of the talent in your organization to form a clearer picture of internal and external threats?
What if you could track your internal data to understand whether changes in the way you do business could be generating an emerging risk?
• Predikat (Healthcare) • Mumsnet (Parental Advise)
• Governments (Law Enforcement) • Bubble Hunters (Financial Analysts) • Regulators (Proactive Regulations)
• Customer Sentiment • Word and Speech Analysis (Fraud) • Process Mining
• SONAR
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Digital Transformation vs. Disruptive Risks
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Digital Transformation Risks
1. Data Quality and Data Governance
2. Information Governance
3. Mobile Application
4. eChannel Platforms
5. Digital Strategy
6. Digital Marketing
7. Social Media Strategy
8. Cloud Implementation
9. Analytics / BI Strategy and Roadmap
10. Cyber Security
11. Digital Identity
Disruptive Technology Risks
1. Security Risks (Mobility, IIOT) • Design Vulnerabilities • Cyber Attacks
2. Physical Risks (Autonomous Tech) • Accidents / Mass Injuries • Unforeseen Events • Product Defects
3. Decision Risks (AI, Machine Learning) • Biases • Mismanagement • Lack of Regulation
4. Legal and Business Risks (3D Printer) • Copyright Infringement • Lack of Regulation • Support Risks
Talking about Emerging Risks is a Good Thing…
Doing something about them would be even better
Thank You Contact Protiviti
Amit Ray
Managing Director
Data Analytics Solution Leader
D : +965 2295 7821
M: +965 9725 3608
