Hersh Shah, CEO, India Affiliate, Institute of Risk Management

Hersh is the CEO of India Affiliate, Institute of Risk Management and India Chairman of IRM Regional Group. Hersh has been delivering sessions on Enterprise Risk Management since the age of 21 and he has educated over 7000+ students from varied backgrounds.He has over 11 years of experience in audit and assurance, risk management, consulting and corporate finance including structuring strategic alliances & partnerships with specific focus in the education sector.

 

Although most of us associate extended reality (XR) tools like augmented reality (AR) and virtual reality (VR) with gaming, XR usage has widened far beyond this industry. A 2019 Accenture report had predicted that industrial spending in AR/VR will outstrip consumer spending by 2023. The pandemic has spurred this trend further, as businesses use XR tools to reduce costs, increase efficiencies, and facilitate remote working and employee training. XR has also progressed beyond AR and VR, to include haptics, robotics, holograms, Artificial Intelligence, and Machine learning. 

Given the growing usage of XR tools in consumer experience and across business functions, it is critical that these be considered carefully in the organisation’s risk management strategy. Like other digital tools, such as cloud computing, XR can also be used for adverse purposes, and staying proactive and alert can help companies in utilising XR tools to their benefit without falling prey to the threat they may pose. However, we must first identify the risks associated with the growing usage of such tools, particularly AR/VR, before we move on to managing them. 

Threat of privacy breach

Few people realise the extent to which XR permeates our life today, or the amount of personal data these tools can access through phones, wearable tech, or laptops. Apps like Snapchat and Facebook gather biometric data, such as speech, and retina and face patterns. Many apps also use the phone’s hardware to track what we are seeing or listening to. We even allow apps and websites access to our location, messages, contacts, and other folders in our phones or laptops. 

Although many apps have included safety features and permissions, users may not do their due diligence, or may become careless over time. Superficially, these tools may seem innocuous or insignificant when compared to the experience and convenience that comes with the trade-off. For instance, a gaming app that captures our image and morphs by adding interesting props may appear to be harmless entertainment. However, it also has access to our biometric data and may even have access to other sensitive information stored in our phone. 

Unfortunately, there is no way of ascertaining or safeguarding this information, as data breaches can occur even when the company has extremely stringent cybersecurity. Even companies such as Facebook and Apple have reported cyber breaches in the past, despite their intense focus on data security. 

Risk of identity theft

As VR/AR move towards a larger online presence, our virtual avatars will also transition to different forums, from socialising platforms to training modules at work. When we consider the access that AR/VR tools have to our personal data, including biometrics, there is a very real danger of identity theft. A data breach allows hackers the opportunity to hijack our avatars and access real-world permissions, such as those for making payments. 

Mental impact

While there are no definitive studies on the impact of XR on the mental health of users, there is a growing concern that it can foster addiction. The gaming industry, where it is most widely utilised, has repeatedly come under the scanner for its potential in spurring addictive playing habits. The World Health Organisation has also included gaming disorder under its 11th Revision of the International Classification of Diseases. With the greater adoption of AR/VR in social media, we must make greater efforts to understand their impact on our mental health. 

For instance, when used for social media, the experience of XR can exacerbate its negative effects, such as anxiety, depression, and low self-esteem, and create a disassociation with reality. As VR worlds become more sophisticated and immersive, users can find it increasingly difficult to separate the virtual from the real. The behaviours, ideas, and social interactions in the virtual world can, then, start to influence our real world. 

Risk of exposure to antisocial behaviour or radicalisation

Once VR worlds become commonplace, they will carry the dangers of online interactions, such as trolling, cyber bullying, and radicalisation. In fact, the immersive nature of these interactions can potentially create a bigger impact. Exposure to such behaviour can influence real-world ideas and opinions.  

Addressing XR risks

The aforementioned risks may largely concern consumer behaviour, but we cannot discount its impact on businesses. As we move towards greater adoption of XR tools, these factors can affect employee behaviour. In addition, these potential risks to consumers can eventually hurt the business’ image, reputation, and may even put it in legal jeopardy. For instance, ignoring cybersecurity norms or regulating user behaviour can attract unwelcome scrutiny by regulators. 

It is clear, therefore, that there is a pressing need for companies to enact a robust risk management strategy that is future-capable, and agile enough to address these, and other, novel challenges in a comprehensive manner. Digital risk management qualifications, such as those offered by Institute of Risk Management, allow organisations to strengthen their risk management teams with the specialized expertise necessary to combat threats arising from the widening influence of XR technologies and applications, and help risk professionals bolster their arsenal of skills for this nascent, yet dynamic, domain. 

With the power and influence that technology wields over our lives today, there is a valid concern, across civil society and various governments of the world, about its perils. The risks associated with immersive technologies like XR make it even more critical that we address these concerns through a transparent, systematic, and conscientious approach. Enterprise risk management techniques offer the most effective solution in addressing and mitigating such adverse events while ensuring that organisations can safely adopt XR to aid the pursuit of their business goals.

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