Edited and prepared by Oscar Michel, Masters in Journalism, DCU
Great Guest post by Andrew Koh, a notable thought leader, governance and risk management subject expert. He has presented to boards, C-suite executives and industry experts from central banks, government agencies, financial institutions and corporations in major conferences as guest speaker, adviser and expert panelist. He has written specialist magazine articles and conference papers on risk management, financial crime and technology related interests.
1. Making a case for Blockchain Risk Management, whose doing it first?
Distributed ledger technology, commonly called “Blockchain”, is fast becoming a game changer that could have huge impacts on the current business models and to disrupt the global corporate and financial ecosystem. So, the next question should be: who’s looking after these risks that are coming out of Blockchain and managing them? It’s the risk managers themselves of course!
2. Creating the Power of Risk Awareness, coming from the Risk Managers.
Risk managers need to find the power of how creating risk awareness in their own organisations can help to support the design, development, testing and implementation of Blockchain solutions for their clients. A recent global survey reported that less than 30% of finance professionals are aware of Blockchain. So what does that mean? One interpretation risk managers, can take away is more than 70% of current workforce, could potentially lose their jobs if they do not learn to adopt this new game changing tool!
3. Knowing the Business, building TRUST.
No product or service can work without gaining trust from all stakeholders involved. But yet from my observations as a risk manager, few risk managers are willing to work beyond their specialised, albeit silo type of job duties and are happy to let their business colleagues do the job for them. So how should risk managers address this gap? One approach risk managers should adopt is to work with the design and development teams of Blockchain projects to understand how the Blockchain business is created, only then can they gain their colleagues’ trust and work together to identify, mitigate and manage these risks.
4. Managing INNOVATION Risk.
The biggest risk of innovation is the fear of failures! From my personal experience in presenting to regulators, board members and C-suite executives, it is the responsibility of a risk manager to properly set the level of expectations on Blockchain developments to all the stakeholders involved upfront. Blockchain innovation requires the creation of a good roadmap detailing a series of budgets with specific deliverables within certain time frames and performance indicators. So Blockchain development is a journey, not a project management timeline, that seek to first to change the mindset of workers so as to fundamentally transform an organisation existing business model into a more efficient and effective business platform to better serve their stakeholders.
— Andrew Koh Meng Wee (@KohWee) December 11, 2014
5. RISK TESTING BLOCKCHAIN Assumptions.
As applications of Blockchain will differ by use case, each leveraging the technology in different ways for a diverse range of benefits, it is important to risk test on the quality of these Blockchain applications to make sure they are indeed hackproof and the development details in the making of these applications during development phases. Other critical risk test areas lie in the Blockchain Digital Identity which forms a critical enabler to broaden applications as well as the Digital Fiat, along with other emerging capabilities, that have the ability to amplify benefits and also the risks accompanying these benefits.
6. Managing Regulatory Risks
It is important for any regulated entities to keep their conversations open to their respective regulators during the time of their Blockchain development activities. This is fundamental as we should never under-estimate the powers of regulators and the regulatory risk impact on organisations as a consequence from regulatory actions taken against these institutions. Blockchain is no exception. Have a good roadmap to show your regulators and make them understand on what your organisations are trying to achieve.
Without a doubt, Blockchain is a game changer that is rapidly expanding and could potentially impact on every aspect of our lives. These changes may come sooner that we least expected. Alongside these rapid developments, the responsibilities lie in all parties involved: government, regulators, financial institutions, corporations, consumers to remain vigilant on the risks generating from these Blockchain services and products, in order to learn on how to manage these risks so that we can safely embrace and to enjoy the rapid advancements made into the societies we belong to and to make this world a better place to live in.
China and India are fintech champions. https://t.co/666bqccHsl
— Andrew Koh Meng Wee (@KohWee) July 6, 2017