Taming Information Technology Risk: A New Framework for Board of Directors
Information technology is redefining the competitive landscape for every major corporation. No matter what industry they are in, companies rely on IT for everything from squeezing costs to streamlining processes to leapfrogging competitors.
Unfortunately, rapid technological change has also created new risks — prompting many corporate directors to express concern over boards' ability to provide adequate IT risk oversight.
A recent Oliver Wyman / National Association of Corporate Directors (NACD) survey of 204 corporate board members found that, while virtually all board members (99%) acknowledge that IT will have a significant business impact on the companies they govern over the next five years, more than half (51%) say they are not given enough information to perform their oversight duties effectively. Directors also cite insufficient IT expertise at the board level and the fast pace of technological change as stumbling blocks to effective IT governance.
There's a lot at stake: The world's largest 500 companies lose more than $14 billion every year because of failed IT projects, according to an Oliver Wyman analysis. This report, “Taming Information Technology Risk,” introduces a framework for board members to use to help them evaluate four areas of IT-related risk:
- Competitive risk
- Portfolio risk
- Execution risk
- Service & security risk
Companies that receive valuable board direction and input on IT-related risk will have a significant competitive advantage over those that don’t. By using a common framework, board members will have a shared lens through which to assess their position and a solid platform from which to take actions that benefit the corporations and shareholders they serve.