Dive Brief:
- Nearly two-thirds of board directors are planning to increase their risk appetite through 2024, according to a Gartner survey released Wednesday. Last year, 57% of boards were planning to increase their risk appetite.
- The most important investments in technology identified by board directors are AI and ML. The next key investments are software enhancements and data and analytics, according to the report that surveyed 281 board directors and corporate board members.
- Almost all — 9 in 10 — board directors say that digital business is now embedded in all business growth strategies. Boards are looking to the CEO as the primary leader responsible for driving digital initiatives, ahead of the CTO or CIO, according to the report.
Dive Insight:
If the CEO is the primary business leader and digital business is embedded in all business growth strategies, it only makes sense for the CEO to be responsible for driving digital business growth.
However, this is not a small change.
“It’s not enough to be seen just as a technology leader and business secondary,” Partha Iyengar, distinguished VP analyst at Gartner, said. “So that transition, I think, has become much sharper and more pronounced with this shift to the CEO calling the shots in digital business; it is all about the business with the digital part being a key enabler.”
The change will be more pronounced in technology-heavy industries, such as banking, retail, telecom and healthcare, according to Iyengar.
“So that’s being turned on its head, where technology defines the competitive realities in the industry,” Iyengar said.
Mobile capabilities within the banking sector have become more and more the norm, pushing the industry to reimagine the value technology can bring.
Truist opened a technology center in June that handles nearly six million client interactions, 87% of which are digital, every day. Citigroup announced in July it had boosted its technology spend by 14%. In June, State Street said it would be transferring funds from run-the-bank tech spend to digital transformation.
Banking is just one example, but the results are profound. CIOs and other tech leaders will be working closely with the CEO to drive digital growth, or risk their business falling behind.
Boards recognize this, as well, which is why they are planning to increase their risk appetite even as record-inflation results in lower spending power.
These headwinds are exactly why boards are looking to increase their risk appetite, according to Iyengar.
“So when you put that as the context, at the end of the day a business cannot say, ‘I’m not going to make decisions until the fog of uncertainty lifts,’ because that’s not going to happen anytime soon,” Iyengar said. “The only other option that boards have is [thinking] how do we get more comfortable making decisions in a major context of uncertainty where we can’t wait for bulletproof business cases and absolute ironclad ROI guarantees.”
This requires a shift from looking at risk as a threat to risk as an opportunity, Iyengar said.
