How can we manage the emerging risks from technology?

The internal combustion engine automobile is one of our greatest technological achievements with enormous benefits for humanity, but it also changed the world we live in beyond recognition and brought numerous risks, some of which we are only beginning to understand 130 years later.

The impact of the motor vehicle is huge and extremely visible. An estimated 2 percent of the available land in the United States is covered with asphalt. The need for oil to power our automobiles is implicated in regional conflicts around the world, particularly the Middle East. Global markets are highly dependent on the price of oil. CO2 emissions and other pollutants from petrol engines are implicated in climate change, health issues and environmental degradation. n road accidents each year.

On balance, the benefits of the petrol engine probably outweigh the disadvantage, but it remains a perfect example of how new technologies can shape the world around us in surprising and unexpected ways. The history of the petrol engine is characterized by a complex interplay between interests, benefits and risks, all of which are highly interconnected and all of which resonate globally. It has shaped public policy, fuelled (literally and figuratively) wars, and changed our planet beyond recognition.

New frontiers

And this is only one technology! Today, the frontiers of technology are expanding at an unprecedented rate. Global Risks 2015, a report produced by the World Economic Forum in partnership with leading corporations such as Zurich Insurance Group, shows that technological risks remain high on the radar for global leaders. But whereas in the past, much of that concern has focused on areas like cyber-crime and digital risks, awareness is now spreading into other areas, like biotech risks, artificial intelligence, localization of production, and the risks associated with global hyper-connectivity.

These and a host of other emerging technologies have the potential to disrupt current business models, shape the political or environmental landscapes, or transform the world in much the same way that petrol did.

The birds and the bees

To give a recent example, there has been growing concern over the impact of neonicotinoids, a class of pesticide. In a recent report, the European Academies Science Advisory Council warned that, “[T]here is more and more evidence that widespread use of neonicotinoids has severe effects on a range of organisms that provide ecosystem services like pollination and natural pest control, as well as on biodiversity.”

If these findings were found to be  accurate, although manufacturers are contesting them strongly, they have enormous implications for all humanity, posing an existential threat to food security and bio-diversity. The contingent risks are almost unthinkable, as we saw during the Arab Spring when a spike in wheat prices was the catalyst for social unrest and political change across the Middle East.

Extremely loud and incredibly close

The potential scale and enormous scope of these emerging technological risks, and the accelerating pace at which they are developing, also presents risks.

The complexity of these issues and the sheer volume of information can make them seem overwhelming. At the same time, the layers of special, local and international interest can make it hard to develop a coordinated coherent response.

As an example, cyber risks pose a growing challenge to businesses and society. The world is becoming increasingly interconnected and dependent on digital technology, but conflicting national interest mean that there is still no global governance framework in place to manage these risks and to stamp out issues like cyber-crime or agree global frameworks for data management and security and similar issues. As a result, regulation is applied locally according to local needs.

We see similar challenges in managing major global issues like climate change, mass immigration, food and water security, and emerging bio-technologies.

Making sense of complexity

Given this uncertainty and the complexity of the issues, businesses need to become increasingly proactive in managing technology risks. Because technological risks may not be visible or easily interpreted, the emphasis needs to be on adaptability and risk mitigation.

At a bare minimum, that requires adopting an holistic approach to risk management, with oversight at the level of the Board and C-suite.

Companies need to factor emerging risks into their long-term strategies and foster a culture of risk awareness. They need to understand how changes in technology can affect business continuity or their workforce, erode their competitive advantage, or make them vulnerable to attack. They need to recognize that their suppliers and customers may be a vector for cyber-attacks or simply vulnerable to technology or tech-related issues. And they need to have a strategy in place to respond to emerging technological risks, whatever they may be and wherever they may arise.

This article is published in collaboration with Zurich. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Steve Wilson is a Chief Risk Officer General Insurance at Zurich Insurance Company.

Image: A magnifying glass is held in front of a computer screen. REUTERS/Pawel Kopczynski.