The techies over at IT research and advisory firm Gartner Inc have defined Big Data as “high-volume, high-velocity and high-variety information assets”.
Some industry observers frequently add a fourth V – veracity – to Gartner’s volume, velocity and variety. I would like to suggest a fifth – volatility.
However, the technicalities of its definition aside, there is no doubt whatsoever that Big Data is here to stay.
The amount of data available to and about any organisation is growing exponentially, and I could quote endless statistics to confirm this.
Big Data brings both big opportunities and big challenges, and this is why you must approach it with sound risk management. In fact, most organisations even no longer have the choice of whether to have Big Data or not – it’s already there and needs to be managed.
Furthermore, keep in mind that the amount and quality of data available on any topic has a direct effect on uncertainty and therefore on risk.
How should your business approach Big Data?
the opportunity front, Big Data gives a business the potential to know more about its clients, suppliers, partners, competitors and others in the supply chain than ever before and therefore to take better-informed business decisions.
This means you must have powerful and flexible analytic tools to crunch all this data.
Given the velocity of data – the speed at which it becomes available and is spread – and its volatility – the number of sources from which data is sourced – it is also very essential that your key risk indicators (KRIs) and key performance indicators (KPIs) are not only highly responsive but are also kept finely tuned.
These can enable you to identify and respond to either threats or opportunities as soon as they emerge so that you are never caught off-guard by any developments.
These indicators must be monitored in real-time and management should be kept up-to-date on whatever incidents or trends are developing, whether positive or negative.
This way, your business can pounce way before your competition knows what’s going on. Also, make it a point to compare multiple data sources for the sake of data veracity.
That awkward moment when you make a huge business decision based on a false call…
How should you handle the risks that come with Big Data?
Some other challenges which any executive responsible for risk should consider include:
- How, in the age of Big Data, am I managing information security risk issues, including those introduced by complementary trends such as ‘Bring Your Own Device’ and the demands for anytime-anywhere mobile data access?
- Where in this mass of data is ‘private’ information about individuals and is it protected appropriately?
- If some of our data is processed or stored externally – in the ‘cloud’ – is this managed properly and have we undertaken a full risk assessment of the cloud provider?
- How are we protecting our intellectual property?
- How do I incorporate Big Data into the scenarios I use to stress-test my business?
In summary, Big Data creates both threats and opportunities for risk managers and risk management systems. You should be able to analyse very large amounts of data in real-time and from a wide variety of sources to generate KRIs and KPIs.
However, analysing is not enough. This analytics capability needs to be supported by process modelling, workflow, and flexible rules engines which match your specific business.
Big Data will almost certainly intensify many already existing risks, not just in the IT space, but across the business, as well as introducing new risks so we all ought to stay vigilant.
Ross Millar is a Senior Business Development Manager at Protecht, an Australian risk management company with an international reputation and client base which specialises in software, consulting and training in financial and operational Risk Management.
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