Risk Trends 2025 and Beyond: Digital Transformation

The technology is ready, but is your organization? 

Digital transformation has surged since the pandemic as Canadian businesses rushed to stay afloat. Many feared that without upgrading their digital capacities, they’d soon be out of business. This urgency was felt across many sectors, from retail chains needing to expand their online presence to manufacturers grappling with disrupted supply chains. 

But this digital transformation rush brought its own set of risks and challenges. 

One of the biggest issues is resistance to change. When new technologies and processes are introduced, a workforce can be resistant because they prefer the status quo or fear job displacement. This resistance can slow down, or even halt, the transformation. Leaders need to clearly communicate the benefits of new technologies and involve employees in the transition to ease fears. 

Are you ready for it?

Another risk is the lack of a skilled workforce. In 2023, more than half of Canadian businesses reported that their current workforce wasn’t fully proficient in the necessary skills, including many digital skills. Without training and development, staff may not keep up with advancements in technology, leading to an unemployment crisis as tech outpaces talent development. 

Effective leadership and a clear digital transformation strategy are vital to maneuvering through such a significant change, including modelling the end state with a clear plan for required resources and capabilities. Without a solid change management plan, organizations can struggle to implement new processes and realize the benefits associated with the transformation, leading to wasted resources and stalled progress. 

One example comes from an organization that spent millions on new technologies but didn’t engage their unions early in the process. And when it came time to train employees on the new systems, the unions resisted, fearing job losses. As a result, the new systems sat unused, wasting time and money, and halting transformation. In the end, by the time natural turnover occurs and the needed digital expertise is in place, the new systems may already be out of date.

So, why not engage a third-party vendor? Overdependence on outsourced IT vendors for digital transformation holds its own risks — as mentioned in the Third-Party Risk Trend section. Relying too much on outsourced IT can lead to issues with cost, quality, and control, especially if they fail to deliver. By developing in-house teams, you can maintain control over digital transformation efforts, as well as train future leaders who have innovative, digital minds. 

Why stop there? Here are other risks to consider:

• Cyber security threats
• Data privacy non-compliance
• Technology misalignment
• Scalability issues
• Siloed data and systems
• Project cost and schedule overrun

Questions to consider: 

• Is your organization ready to embrace and leverage new digital technology? 
• Do you have the resources and capabilities needed to manage the end state and deliver on the expected benefits? 
• If not, how much time and money is needed to manage the change to be prepared?