Page 49 - The Insurance Times March 2025

Case Study

Innovation Risks in Implementing New Technology

Executive Summary implementation raised concerns regarding data privacy
and legal compliance.
Innovation and technological advancements are crucial for
the survival and success of businesses in today’s fast-paced
world. However, the implementation of new technology Definition of Key Terms
carries significant risks, including financial, operational, and 1. Innovation Risk: The potential for failure, financial loss,
security concerns. This case study explores the challenges or operational disruption associated with the introduc-
faced by a multinational corporation in adopting artificial tion of new technologies or processes.
intelligence (AI) for automation, the risks encountered, and 2. Artificial Intelligence (AI): A branch of computer science
how they were mitigated. The study highlights key lessons,
focused on creating intelligent machines capable of per-
best practices, and recommendations for organizations aim-
forming tasks that typically require human intelligence.
ing to embrace innovation while minimizing risks.
3. Automation: The use of technology to perform tasks
without human intervention, improving efficiency and
Introduction
accuracy.
Innovation is at the core of business growth, yet it brings
risks that can impact financial stability, regulatory compli- 4. Cybersecurity Risk: The likelihood of exposure to cyber
threats, including hacking, data breaches, and malware
ance, cybersecurity, and operational efficiency. Companies
that implement new technologies without adequate plan- attacks.
ning and risk assessment often face disruptions and setbacks. 5. Change Management: A structured approach to
This case study examines a multinational corporation’s jour- transitioning individuals, teams, and organizations from
ney in integrating AI-based automation into its supply chain. a current state to a desired future state.
The study explores the risks involved, solutions deployed,
outcomes achieved, and lessons learned to provide a com- The Problem: Challenges Faced by the
prehensive understanding of innovation risks and their miti- Organization
gation strategies.
The company, a global logistics and supply chain firm, aimed
Major Problems Identified to integrate AI-based automation to optimize warehouse
management and inventory tracking. However, several chal-
1. Operational Disruptions: Implementation of AI led to lenges arose:
system downtimes, affecting supply chain continuity. Integration Issues: AI struggled to communicate with
2. Financial Overruns: The project exceeded initial cost legacy systems, leading to inefficiencies.
estimates due to unforeseen technical challenges. Budget Overruns: Initial cost estimates were inad-
3. Employee Resistance: Employees feared job losses and equate, leading to an extended project timeline.
showed reluctance to adopt AI-based processes. Workforce Resistance: Employees resisted AI-driven
4. Cybersecurity Risks: AI-driven automation systems automation due to job security concerns.
were vulnerable to cyber threats, including data Security Threats: The implementation introduced
breaches. cybersecurity vulnerabilities, exposing sensitive data to

5. Regulatory and Compliance Issues: New technology potential breaches.

44 March 2025 The Insurance Times