BLOCKCHAIN RISK MANAGEMENT
For its many exponents, blockchain, far more than bitcoin and the other cryptocurrencies which have been built on its decentralised framework, represents the future of many aspects of business and, indeed, day-to-day life.
The blockchain, essentially an encrypted, distributed ledger, may fundamentally change financial services, the internet, international development, the sharing economy and everything in between. It will enable organisations to lower costs, decrease interaction or settlement times and improve transparency. It will revolutionise the way we interact with companies and transform peer to peer transactions.
In light of these and other applications, enthusiasm for blockchain from big banks and financial institutions and other organisations is gaining momentum. According to International Data Corporation (IDC), worldwide investment in blockchain solutions is forecast to reach $11.7bn in 2022. Meanwhile, in a recent Deloitte survey of over 1000 senior executives, almost half of respondents said they expect their organisations to bring blockchain into production within the next year, while over 30 percent stated that they are already operating on blockchain. According to McKinsey, leading technology players are also heavily investing in blockchain: IBM has more than 1000 staff and $200m invested in the blockchain-powered Internet of Things (IOT).
Blockchain’s potential applications are legion, particularly in the financial services space, where it already underpins some cross-border payments and processing. Smart contracts, cloud storage with encryption, supply chain accountability and many other functions are likely to be driven by advancements in the coming years.
Beyond financial services, some analysts suggest blockchain will become the foundational technology for the future of risk management.
Oct-Dec 2019 Issue
Richard Summerfield