Speaking at the annual ESPO conference, Dame Inga Beale discussed how in a rapidly changing world, standing together and taking responsibility can drive positive change.
The changes brought about by the fourth industrial revolution – Industry 4.0 – pose huge challenges to people, business and government. We have access to more data than ever before; and disruptive technologies are changing the way we do business, interact in society and even how we make transactions and use our banks. In May 2019, port industry representatives came together for the 2019 European Sea Ports Organisation (ESPO) conference in Livorno, Italy, covering decarbonisation, technology, emerging security concerns and more. Dame Inga Beale, former CEO of Lloyd’s of London, spoke about risks and vulnerabilities in a world of increasingly intangible assets.
She said that taking corporate responsibility is key to mitigating the negative impacts of technology and mitigating the risk to digital assets from cybercrime. Businesses must also be responsible for their impact on the environment and show they have a wider purpose – they must drive positive change in society and be transparent in their actions. Beale emphasised that the one thing uniting us all, despite the challenges that face our world, is that we need to have a voice and to be involved in the decisions of business, industry and politicians in order to build trust and create inclusive prosperity for all.
People over profits
In a time of unrest across the world, society and businesses are confronted with an enormous change. Beale explained that the world has changed dramatically since the first World Economic Forum (WEF) summit in 1971. She said: “Over that time, society has seen so much progress but as a global society we have seen growing disparity. There are those who have been fortunate enough to benefit from globalisation and there are those who feel let down and left out by the institutions that promised to work in their favour. Globalisation and connectivity have arguably brought the world closer together – international trade has helped drive economic growth and lifted millions of people out of poverty. Exports of goods and capital have increased the growing wealth of nations around the world – every country around the world has been relying on this international network of trade partners and pollical allies, who support economic opportunity collectively and collaboratively.
“I find it fascinating but depressing that some of the economists thrived thanks to global network of trade capital, believe retreating to protectionism is the answer – it is not. We have seen a complete change in rhetoric from some of the world leaders. China has laid down its commitment to strengthening globalisation for which, in recent times, has probably been the greatest beneficiary – and this in complete contrast to one of the traditional leaders of open trade, the USA.
“China, with its huge investment into the Belt and Road initiative, is now the country doing the most to connect us all and, of course, with that effort is calculating to ultimately seize the most power. There are some other countries joining that rally against protectionism. There are walls being built – metaphoric or real – decisions are being made by people to take themselves out of those union that have done amazing things to bring peace and prosperity. This backlash against globalisation threatens do undo decades of work. We must all continue to make the argument for economy connectivity to make sure the benefit is shared.”
Business must take responsibility in the face of challenges
According to Dame Inga Beale, the first challenge we face is that of climate change. She told the audience: “Decarbonisation is high up on all of your agendas. We must all be committed to play our part to do something about it. Government commitments are one thing, but business has an important role to play. There have been demands from protesters and shareholders alike to for action to be taken and leaders of business have to take on and address challenges and of the concerns of the people that we exit to serve.
“The second challenge is that we live in a world where people’s personal data and digital self are up for sale on the black market. The world of digitalisation is shaping the core foundation on which our traditional business models are based and posing new risks all around us. We are living in a world where if you are not paying for the product you are the product – everything we do on our phone or computers captures something about us in data form whether that is our age, location, interests, spending habits or political leanings. Companies, app providers and social media platforms need to prove they are behaving responsibly with the masses of data they are collecting – I don’t believe they are doing enough and I don’t believe that government regulation has any idea what it should be doing about it as it grapples with the consequences of the digital world and the rapid advancements we are seeing.”
The stark underbelly of cybercrime
More data was created in 2018 alone than in the entire preceding history of the human race. In 2021 there will be 22.5 billion Internet of Things (IoT) devices; and trillions of dollars will be invested in the next few years in this connected technology. Beale said: “We need to be grappling with what AI is going to do – how are we going to make sure there are no biases being built in to these programmes; how are we going to make sure we don’t have class actions of the future against the technology we are all so quickly adopting in our businesses? Cryptocurrencies are a particularly fast-moving area – we have moved on from a question of whether they will survive, now it is a question of how rapidly they will expand and be adopted. What does all this mean?
“All these things are hugely susceptible to cyberattacks and are starting to take their toll on global economic development. However, the fall out is not purely financial. For businesses there are other serious concerns of cybercrimes – reputational damage, loss of investor confidence, distraction of management, sacking of key executives. Hackers can be your neighbour, neighbour’s child in their garage or a state supported actor – cybercrime is the stark underbelly and is changing the sorts of risks that all businesses are facing, at a time when we are all investing in technology.
“This makes us all more vulnerable than ever. The majority of asset values in large companies are now intangible – not made up of physical assets such as software data algorithms – the risk you will all face tomorrow are different to the exposures you have today. Hackers are almost outpacing us; they are innovating. We are locked in a sort of ‘cyber arms race’ between the hackers and the defenders – there will probably never actually be a winner.
“There are actions that all businesses can take. Digital risk needs to become an executive and board level concern – the management of digital risks can no longer be treated just as an IT problem. It is one of the most material impacts that can affect business today and huge reputational damage has been caused. Businesses can lose intellectual property.
Governments need to be lobbied to get their regulation up to speed with this changing risk because in my view they are not keeping pace. We need to make sure we are engaging technology pioneers to better understand where their innovations are going.”
Trust in a connected world
Beale continued: “Another challenge out there is the connectivity and transparency of what is going on – what are we doing as businesses about public policy issues, whether it is pollution or climate crisis, business needs to step up to that challenge. Trust in institutions and experts is low; and trust in governments and business has declined dramatically since the 2008 financial crisis. We need to do a reset to win back public trust and create effective systems fit for 21st century. Businesses should have human responses to things happening in people’s lives – they want us to show humility and admit that we don’t know answers all of the time. Being transparent and open is incredibly important.
“The Lord Mayor of London came up with five principles for this: CIVIC – confidence, integrity, value, interest for others; and communication. Businesses need to be out there saying they have a clear purpose beyond profit making and it is important for building. People want to feel they have a voice and that they are being thought about involved and included.”
United for prosperity
Dame Inga Beale concluded: “Businesses are in the great position to take advantage of all these opportunities but also all of those new risks are out there making world more complicated but if we collaborate and do it together, we can have a wider purpose and can navigate to help society. One thing that unites us all, from rural farming communities in America to the disillusioned populists of Europe, the desperate refugees of Syria and the burgeoning and increasing middle classes of China; there is one thing that brings us together: we are all searching for a better life, a louder voice and to be included. We want to be considered and we can do this if we work together. We can build inclusive prosperity for all so let’s go out and do it and do it together.”
