A data breach is one of greatest concerns for organizations from a business risk perspective, according to Oracle CEO Mark Hurd. “The thought of getting hacked five or six years ago wasn't a boardroom conversation. It is now,” said Hurd in January at the Oracle Modern Supply Chain Experience 2018 in San Jose. The threat of a hack and the resulting effects on customer mistrust, reputation decline, and potential for revenue loss represents a significant financial risk for business leaders—one that they may not be prepared for.
And cyber security isn’t the only new trend that’s shaping the future of risk management. Disruption by new business models presents a clear challenge for CEOs. In industry after industry, startups and Silicon Valley companies are using new technology to shake up the status quo and capture market share. “If you're a Marriott, in your five-year strategic plan, did you imagine Airbnb? Did you imagine if you were Hertz, the effect of Uber?” Hurd asked the audience at the conference.
To further prove his point, Hurd noted that more than half of the companies in the Fortune 500 in the year 2000 are now gone. “If you think it couldn’t happen to you, you’re wrong,” he said. “Companies go away in a relatively short period of time.”
“Business managers are saying, ‘I want to move this risk. I want to move this complexity. I want to move this cost.’”
How can organizations stay ahead of the growing risks of industry disruption and cyber security threats? Hurd recently shared his insights on corporate risk management and the changes shaping IT in a Forbes Interview Podcast. Companies need to embrace modern technology as part of a business strategy to up their innovation game, said Hurd. To compete successfully in a fast-paced, digital economy, companies need to adapt to develop innovative new products and services.
To meet the demands of a modern economy, organizations need to develop new financial strategies that balance IT maintenance and innovation—and the best way to do that is to move to the cloud.
“The cloud simply costs less and you do less work, and it is more secure. You can innovate on our R&D bill instead of your IT bill.”
Hurd believes that the cloud is transformational and foundational to the future of business, driving the ability to connect with customers and provide experiences never before imagined. Products become services, services become experiences. Business processes adapt rapidly and new business models emerge.
“The cloud is not just a technical issue,” he noted. “This is bigger than that. It’s generational. You will see a complete change in how IT works, because it’s gotten to the point where the old model is not sustainable.”
“The old systems and processes were all built with a different way of thinking of demand,” he added. “Now, you can’t take 28 days to get something from here to there. You have to line up your supply chain with your demand.”