So far, the literature in Enterprise Risk Management (ERM) has focused on IoT’s security and document management challenges. This is inevitable, given how IoT combines the security threats of many-to-many wireless connectivity with the document management puzzles of big, streaming data streams, cloud, fog, and edge computing.
Little attention, however, is being paid to IoT’s potential to help enterprises (particularly large, distributed organizations) manage risk to advance their ERM objectives. By pushing processing, computing, and analytic capacity ever farther out into networks, IoT enables unprecedented levels of insight into processes that otherwise would be inscrutable to management. IoT allows timelier, more granular analysis of processes to provide ever more distant early warning of threats as well as opportunities. The principal limitation is imagination and insight.
Most enterprises’ Key Risk Indicators (KRI) are the result of an exigent compromise between what’s affordable and what's knowable about its mission-critical processes. These KRIs seek forecast events whose occurrence would affect (negatively or positively) the organization's ability to reach its strategic objectives. How far can the enterprise afford to drill down, how timely and granular can it measure its key activities and processes for KRI tracking and enterprise risk forecasting?
With IoT, those processes can be monitored at ever-finer levels by connected sensors that report live feedback, not just of machines and their controls, but of people, events, externalities like atmospheric conditions, stock prices - the list is endless. And thanks to fog and cloud computing, alerts and responses can be triggered not just by binary alarms like an old smoke detector, but by the output of complex algorithms and even predictive analytics.
The specific iterations are limited only by our own ingenuity. Even consumers now have affordable access to devices like the Sense home energy monitor. It identifies devices and appliances from their unique consumption patterns in the electrical panel and applies predictive analytics - not only tracking just how many watts each appliance consumes, but also flagging which appliances need repair rel="noopener noreferrer" or replacement. The Water Hero provides whole-house leak and flood protection by monitoring and tracking water flow to the second, and correlating it with ambient temperature conditions to provide to timelier warning.
By connecting basic sensors to the network, consumers and complex organizations alike can afford real-time monitoring of even their most complex processes. A franchisor can monitor the temperature of a refrigerator, rotisserie or deep fryer to the second, or report on how often the oil is changed. Hotels can monitor waterflow or HVAC loads and be alerted to anomalies from the other side of the globe in real time.
Whether for property management, fleet management, or personnel and workforce management, the IoT provides a whole new arsenal of business intelligence to risk managers and strategists. The ability to discern emerging risks sooner and with greater precision is among IoT’s most valuable returns.