Stability, Flexibility and Standards

Patrick McConnell

This chapter will first examine the major sources of technology risk, especially the constant pressures from external sources to change business and IT models. The chapter will then discuss the complex issue of the trade-offs between “stability” and “flexibility” in any technology strategy, and how those trade-offs create risks. It is argued here that adoption of industry standards helps to minimise the strategic technology risks in those trade-offs. The chapter concludes by discussing the integration of technology standards into the strategic technology risk management framework (STRMF).

SOURCES OF TECHNOLOGY RISK

As if continuous waves of technology innovation were not enough, there are constant pressures to change a firm’s IT model from external sources. McConnell (2016) identified that within financial institutions there are a number of major external sources of so-called “strategic competitive risks”, which can be grouped into the following four risk domains.

    • Customers: The strategic risks related to interactions with customers that create risks for a firm’s strategy, such as customers’ desires for new products and services or (as described in Chapter 1) the rate of

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