The term “digital transformation” refers to the process of upgrading to more sophisticated systems, infrastructure, and technology. When more conventional approaches fail to meet the ever-increasing demands

As businesses go digital, they can get tools that work well, are automatic, and reliable. Still, many risks that come with going digital need to be managed in order to succeed in a digitally transformed world.

As businesses grow digitally, they simultaneously become connected and more susceptible in some domains. Let us examine the main digital transformation risk areas to understand the concept better.

What are Digital Risks?

Adopting new technologies, protecting sensitive information, improving operational efficiency, and implementing organizational transformation all pose digital hazards.

Without an established plan for mitigating risks, these dangers may develop whenever a company adopts new technologies, moves to the cloud, or automates processes.

A 2023 insights poll found that 49% of companies considered technology innovation a key threat. Digital transformation complexity increases data breaches, business interruptions, regulatory non-compliance, and cybersecurity hazards.

Top Security Risks of Digital Transformation

Digital change can create new security vulnerabilities and increase the risk of hacking if it is not properly planned. Digital transformation increases security threats due to the following factors:

Expanded the attack surface

Companies are moving toward digital change so they can access and use technology. Companies have started to use cloud services, AI goods, IoT devices, big data analytics, and other digital tools. Cybercriminals will have a better chance to use the program’s links to get to the data and funds of your business. Any security weaknesses that cybercriminals find are exploited.

Dependency on third-party suppliers

Besides digital transformation, companies have also adopted the latest tools and technologies to carry out their business. So, they have to collaborate with third-party vendors, such as cloud providers or other software-as-a-service providers, to make their jobs easier and improve scalability and flexibility.
Many third-party vendors may have vulnerabilities in their systems or products, or face breaches. In such a situation, you also have to suffer the consequences as you are using their products and services.

Lack of a secure cloud environment

Cloud security technologies are always evolving, so businesses need to invest in IT to keep up with the latest updates and monitor their infrastructure.
Also, business IT teams and other worried employees might not have the skills and understanding to keep the cloud setting safe. A lot of businesses don’t have the right skills to properly protect their cloud systems.

Rapid digitization may jeopardize priorities

By leveraging digitalization's access to a wide range of technologies, businesses can improve customer information exchange and employee collaboration. These online communication platforms are complicated to use. Technologies that facilitate online collaboration further raise the already high risk of data leaks due to human error.

​Despite companies' best efforts, data breaches may still occur due to rushed digital transformation initiatives, inadequate security measures by service providers, and insufficient security budgets.

Dependence on third-party suppliers increases

The adoption of new technologies and solutions by companies results in increased dependence on third-party suppliers. Examples of such suppliers include cloud vendors and software-as-a-service providers.

If those suppliers are already facing a security risk, the company will be exposed to that vulnerability. If there is a contract violation with the suppliers, the same things happen.

Because of this, businesses have an even greater need to exercise heightened vigilance regarding the third parties they allow to enter and become integrated within their supply chains.

Out of Funds

Prioritizing security throughout a digital transition might be challenging due to limited resources. There isn’t much flexibility for additional costs since most of the money goes into the new system.

To preserve data integrity in a growing technological landscape, enterprises must adopt a new perspective. Business owners and executives should recognize the dangers they are taking by lowering their budget for security. It's important to let them know about the safety risks that new technologies may bring and what needs to be done to lower these risks

Lack of a cohesive defense plan

Digital transformation firms may not specialize in cybersecurity. It may be impossible to predict how your transformation project would affect your company's cybersecurity if it doesn't include security.

Organizations may neglect security when connecting data and systems to accelerate digital transformation. A company developing financial reporting or KPI dashboards must extract data from numerous databases and files.

The solution team faces data access issues that impede development and mistakenly provide unauthorized access to data within the solution.

The system functions well, and stakeholders are satisfied; nevertheless, in the absence of cybersecurity oversight, the organization risks exposing financial data to unauthorized individuals.

Moreover, inadequately trained actors external to the industry may exploit weaker protections to infiltrate systems.

Only considering the transformation starting costs

The cost of new technology may seem like a good option because the initial investment is so small compared to the benefits it offers. However, what specifics does the cost plan include? How do these costs manifest over time and across situations as user needs change?

An important risk in digital change is ignoring long-term or complex costs. Complete a thorough cost study of your company's needs, both now and in different possible futures.

Losing sight of other systems and processes

You may make things worse by being so focused on one issue that you miss others. A new technology helps you save time and effort in one area, but it causes more trouble in another.

In such a case, it’s difficult to determine if you’re better off following the transformation.

To reduce this risk, you should have a comprehensive perspective of all systems and processes that may be impacted by change. It may be unclear how change might have ripple effects across the business; thus, it is critical to work with a competent partner that is skilled with this kind of research.

This guarantees that you need in one area while simultaneously maximizing the benefits of that transformation across the firm. It’s a crucial component of a successful plan.

Lack of training and awareness

One of the biggest barriers to digital transformation is individuals who aren’t trained or knowledgeable enough about technology. Many workers are hesitant to adopt new technology because they don’t know what to expect, face the risk of losing their jobs, or just don’t feel comfortable using it. Firms see lower efficiency, lower adoption rates, and worse experiences after introducing new technologies when training is lacking.

Employers must provide ongoing employee training. Hands-on training, interactive seminars, and digital adoption boost confidence. E-learning, mentoring, and gamified learning guarantee knowledge transfer. Offering upskilling incentives and promoting flexibility pushes people to embrace digital change.

How Businesses Can Avoid Digital Transformation Risks

The process of becoming digital for a company might be intimidating at first. It is difficult to remain composed when there are so many potential problems. There is no need for this procedure to be so scary.

Here are some pointers to assist you in managing risks when things become digital.

Identify Cybersecurity Risks

This is a crucial measure to guarantee your total safety. To avoid making costly errors, you must be aware of the specific ways in which your company’s digital transformation might fail. You may be able to use this sort of information to build new plans and goals for the future.

Set A Limited Access Controls

Unauthorized individuals could be able to breach your digital infrastructure due to various vulnerabilities. To protect against insider threats, vulnerabilities, and data breaches, access control should be given top attention.

Make An Incident Response Plan

An effective incident response strategy will enable your team to respond promptly to security events and threats. This results in a significant reduction in harm and ensures that healing occurs quickly.

Implement Network Segmentation

Critical data must be protected by being isolated within a network of interconnected systems and devices. Maintaining access restrictions and limiting lateral movement from any prospective attack across the entire network can be achieved by segmenting your network.

Securing IoT Devices

Make it a habit to periodically update the software on all linked devices and change their passwords. Hackers seeking network access are less likely to exploit these devices as a result of this modification.

Invest in a Trustworthy Cloud Security Provider

A provider that is aware of the dangers posed by digital transformation should provide its infrastructure and security platforms. For the safest, most efficient, and least expensive digital transition, Sangfor Technologies offers a full suite of services and platforms.

Final Thoughts

Any company, particularly an offline one, must undergo digital transformation. Today's technology may improve corporate performance and streamline operations at any size, from a single procedure to a full digital rewrite.

This will make the company better over time. Implementing it needs much study and preparation. Digital transformation challenges and risks include unrealistic expectations, insufficient skills, and inadequate leadership engagement and experience, even at the earliest stage.

Professional, individualized coaching from a reputable IT partner will reduce digital transformation risks and make the IT transformation as easy as possible for the firm.