Each day, businesses invest more of their budgets in digital transformation. According to Statista, the global investment in digital transformation reached $1.85 trillion in 2022 and is projected to reach $3.4 trillion by 2026.
While digital transformation offers immense benefits to organizations, it also exposes the business to numerous threats. Every business needs to be aware of these risks and build a strategy to mitigate and limit them over time.
Read on for your guide to digital risk management for enterprise mobile applications — you’ll learn the core areas of digital risk and understand the importance of ongoing risk management. Finally, you’ll walk away with four key risk management practices for enterprise mobile apps.
5 types of digital risk
Just like the systems that businesses rely on for digital transformation, digital risk itself is complex and multi-faceted. Digital risk categories are many and varied, but we’ll explore five key risk areas that enterprise organizations should prioritize and monitor for threats.
Cybercrime poses a major risk to every enterprise organization. In fact, the annual cost of cybercrime is expected to reach $10.5 trillion globally by 2025.
The proliferation of devices, systems, and services leaves organizations with countless risk surfaces that are vulnerable to cyberattacks like malware and ransomware attacks. Without managing cybersecurity risks, enterprises face the threat of having their systems attacked and disabled or their data held hostage by hackers.
For mobile applications, each user’s mobile device presents an additional and varied risk surface. Sixty-five percent of Android phones never get security patches, according to the Google Distribution dashboard, and some critical iPhone vulnerabilities haven’t been fixed for years. Applications that rely on users’ phones for security face massive risks.
Organizations can (and should) manage cybersecurity risks by investing in security policies and procedures like access control and data encryption. They should also train employees on security awareness and best practices to protect the company from the inside out.
2. Data security
Data security is closely related to cybersecurity, but it’s also a distinct digital risk area. While cybersecurity is concerned with mitigating risk to the services and devices, data security addresses how to protect private data in and of itself.
As we’ve seen in recent years — through incidents like the 2018 events between Facebook and Cambridge Analytica — the cost of data breaches and privacy violations is astronomical. Companies that fail to mitigate data security risks face massive financial, legal, and, of course, reputational damage. These are risks that organizations simply cannot afford to take.
3. Third parties
Working with vendors is an essential component of managing the many elements of digital transformation. But third parties also represent massive risk opportunities. Any mistakes made by a third-party vendor — from ethical and Environmental, Social, and Governance (ESG) concerns to data or financial risks — can have massive impacts on your company as well.
Not only could a third party’s missteps reflect poorly on your company for working with them, but their problems can quickly become your problems. For instance, if you share sensitive data with a vendor who does not have security policies and procedures for risk management in place, their data breach is also yours.
According to AuditBoard, 44% of organizations aren’t managing and monitoring third-party risk — posing a massive digital threat. Proper risk management with third parties takes place throughout the entire relationship, from selecting a vendor until you cease working with them.
As technology and digital transformation have advanced in recent years, regulations around the world have risen to meet them. From regional regulations like the EU’s General Data Protection Regulation (GDPR) to national industry-specific regulations, compliance is a critical but always-moving target for enterprises. If found non-compliant, organizations face significant fines, legal action, and reputational damage.
Because of the recent evolutions in the mobile banking and financial tech spaces, regulations have shifted as well, working to balance organizational innovation with consumer data protection. Enterprises need to stay up to date on regulations and continually assess and manage compliance to avoid fallout.
5. Cloud technology
The use of cloud computing services such as Salesforce.com and Amazon Web Services (AWS) has skyrocketed in recent years — and for good reason. Cloud-based technology enables greater digital transformation and allows organizations to embrace modern solutions.
Unsurprisingly, though, cloud-based solutions increase risk surfaces for organizations, including data security and compliance risks. Cloud solutions also bring availability risks on both the service provider’s and user’s end. To manage these risks, organizations need to build redundancies into the servers so that downtime doesn’t quickly become disastrous.
Crafting a risk management framework
Enterprise risk management isn’t a one-and-done endeavor. The digital landscape evolves constantly — as well as the technology businesses need to succeed — so organizations can’t expect to assess and limit risk one time, then never again. Risk management is an ongoing effort that requires careful strategy, thoughtful planning, and buy-in at multiple levels of the organization.
Enterprises need to implement a plan to manage risks over time. The process should follow some version of this model:
- Identify the risk. As organizations adopt new digital initiatives, work with new vendors, or note new relevant regulations, the first step in these changes is to note any potential threats. Then they can begin to address the risk involved.
- Assess the risk. After identifying, organizations should assess the risk. What are the potential impacts to the organization — including financial, legal, or reputational — if the worst should happen? By weighing the severity of these outcomes, the organization can begin to prioritize the risk and determine how urgent the need to resolve it relative to other risk areas.
- Treat the risk. Of course, the aim and outcome of gauging any risk is to mitigate it. This step is where the organization takes action. They implement security solutions, ensure compliance, update threat models, and create recovery plans.
- Monitor the risk. The final step of risk management isn’t exactly “final” — it’s ongoing. Once they’ve managed the risk, organizations need to observe it over time, making any adjustments or changes and addressing any threats or problems that show up.
These may seem like straightforward or obvious steps. But the truth is that only about one in four organizations take a mature approach to digital risk management, with 15% actively mitigating digital risk and 11% continuously monitoring digital risk, according to AuditBoard.
In a world of continued digital transformation, the other three out of four organizations can’t afford to rely on outdated, manual, or immature risk management practices. Enterprises have too much at stake to not manage risk on an ongoing basis. Each new project and application is an essential milestone to consider and manage every new threat.
4 digital risk management practices for enterprise mobile apps
Enterprise mobile app development carries its own set of unique challenges and risks. The complexity, scale, and security needs of mobile apps — especially in high-sensitivity fields like fintech and banking — mean that the potential fallout of security risks like data breaches can be massive.
For that reason, digital risk management must be a top priority for mobile developers from the very beginning. Let’s explore a few best practices for managing risk in enterprise mobile applications.
1. Start with a Minimum Viable Product
An enterprise mobile application requires a significant investment of time and effort, no matter your industry or audience. To limit the risk from the outset, start with a Minimum Viable Product (MVP). An MVP helps you decrease your time to market so that you can test the features and use cases with your users sooner. It also limits the investment made upfront so that you can gather user feedback as early as possible in the development process.
Building an MVP first lets you take a stepwise approach to your app. Rather than sinking months into a version with all the possible features, you can test the waters first and ensure that each phase meets business objectives and user needs. Then, you can add new functionality to a foundational app that you know works based on feedback.
2. Test with multiple devices and platforms
Of course, testing is an important part of reaching a Definition of Done. While testing can be time-consuming, it plays a critical role in ensuring the app meets user needs, offers a smooth user experience, and can scale to handle times of increased demand. Testing also helps with managing risk by anticipating any issues users might encounter — all before the app is deployed.
To avoid both user issues and any risks that result from app users having different devices and operating systems, a rigorous testing approach to your mobile app is essential. You need to test the app thoroughly on multiple devices to ensure it works correctly and is compatible with all platforms from the start.
What about after deployment? You’ll need to continue testing as you make changes to ensure that new releases work well on every device. Carefully manage version control over time to ensure that users update their apps to avoid major regulatory and compliance risks.
3. Work with a verified IT contractor
Naturally, a critical way to mitigate third-party risk is by finding verified vendors with a proven track record. Look for solutions and partners who have experience building enterprise mobile applications like what you’re looking for. But you should also seek partnerships with solution providers that prioritize security and compliance to limit risk for their clients.
Partnering with the wrong vendor exposes you to insider threats from contractors, which can lead to drastic and lasting consequences for your organization. Conduct due diligence when selecting vendors, and look for organizations with robust security practices. Ensure that signed agreements include the security requirements and responsibilities to which vendors should hold.
4. Use proven solutions for mobile development
Security is a major risk for any enterprise mobile application. Most apps depend on individuals’ phones for security. What’s worse, 89% of security vulnerabilities can be exploited without physical access to one’s phone, according to the Google Distribution dashboard.
Enterprise mobile apps can mitigate this risk by using a boilerplate solution like Neontri’s Mobile Framework. Our framework lets you become the master of your own security. With a security-optimized frontend and backend architecture, the Mobile Framework not only minimizes risk but frees up teams to focus on helping their clients — not work on what they don’t see.
In a world that continues to move toward digital transformation, risk management is of increasing importance. Finding the right software solutions and partners is a key step to not only ensure a smooth and efficient mobile development process, but also to protect your organization and minimize risk.
Remember that risk management doesn’t happen once — and it’s not just the responsibility of the IT department. Rather, it’s an ongoing effort that should involve many departments. Build an organization-wide culture of security, compliance, and risk management, so that digital transformation and new applications can bring all of the benefits and none of the drawbacks.