Web 2.0 Opportunities and Risks

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This presentation is for Chartered Accountants on Web 2.0. It discusses the opportunities offered by social media. Risk and management of risk of social media is discussed.

This presentation is for Chartered Accountants on Web 2.0. It discusses the opportunities offered by social media. Risk and management of risk of social media is discussed.

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  • Why? How? And What?
  • We spend few minutes on this slide; Please provide your comments.
  • Ponzi is a name of a person who defrauded people millions of dollars based on fraudulent scheme.
  • Strong supporters to go for voting- consolidation

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  • 1. Web 2.0 Value and Risk Perspectives Dr.K.Prabhakar, Professor, SRM University1 ICAI 12/22/2012
  • 2. What is this place?2 ICAI 12/22/2012
  • 3. A Bank !3 ICAI 12/22/2012
  • 4. Tool or a Medium Web 2.0 and Social Media changed the way in which we connect with each other and create value. It is a tool or medium? https://www.youtube.com/wat ch?v=QUCfFcchw1w4 ICAI 12/22/2012
  • 5. The three questions and Neuroscience5 ICAI 12/22/2012
  • 6. Questions :Global and Local Issues  US Elections  Corporate Frauds and Fines- HSBC  Ponzi Schemes  Crony Capitalism  Banks  Pharma Companies-For profit hospitals-For profit educational institutions (PISA)  Dishonest Claims  Farmer’s Suicides6 ICAI 12/22/2012
  • 7. Why behavioral pattern repeats? Whatis its impact?  Ponzi Schemes are still in vogue. (1990’s Fixed Deposit Frauds to Emu Poultry)  Tax Frauds.  Governance.  Convicts are benevolent philanthropists.  We stopped believing the “Manufactured Voice”.  We started believing “people”- who talk in “Human Voice”.7 ICAI 12/22/2012
  • 8. Do you think there is place for honesty and integrity8 ICAI 12/22/2012
  • 9. Social Capital Balanced scorecard9 ICAI 12/22/2012
  • 10. 10 ICAI 12/22/2012
  • 11. How?  Collaborate together (Wikipedia, Facebook, Linkedin, Slideshare…)  External Partners (Ground Zero: US Presidential Election- Environmental Sustainability, Gender issues, Ethics, Justice)  To create re-usable knowledge , design and processes  To meet market needs  Through a business model  Trust and Culture work as binding force.11 ICAI 12/22/2012
  • 12. It is no more Stakeholder Corporation.  The Vision, Mission, Objectives – People ignore if we do not practice; Business models are obsolete if we do not incorporate People’s Voice not over used voice of customer.  People include every one Stakeholders+ Everyone= Society= Business in Social Era.  People organize themselves differently enabled by technology.12 ICAI 12/22/2012
  • 13. 13 ICAI 12/22/2012
  • 14. Welcome to Social Era14 ICAI 12/22/2012
  • 15. People Organize in a Flash Occupy Wall Street Anna Hazare Middle East Revolution Justice Katju Comments Tweet postings15 ICAI 12/22/2012
  • 16. Ethics and Values Driven  Wikipedia  MOOCs – www.coursera.org  Marijuana and medicinal properties  End of consumerism- the average American car life- sustainable consumption  Neuroscience based learning  Importance for scholarship16 ICAI 12/22/2012
  • 17. RISK17 ICAI 12/22/2012
  • 18. 18 ICAI 12/22/2012
  • 19. Changes from Tangibles to Intangibles The economy has changed. The changes have occurred due to a shift in value from tangibles to the intangibles.  The economic landscape of the present and future is no longer shaped by machines, materials and labor but by19 relationships, information, techn ICAI 12/22/2012
  • 20. Welcome to the Intangible Economy  On the consumer side, we consume and create more and more content-based artifacts of information and entertainment.  On the supply side, intangible assets such as, human capital, relationship capital, structural capital and strategic capital have become major determinants of a companies’ performance and value. The creation and influence of intangible capital is now the source of a new economy.20 ICAI 12/22/2012
  • 21. Weightless World  The Social Era has created a shift to the intangibles and it will be long-lasting. It affects all sectors and all aspects of the economy. We live in an “weightless world”, where an ever increasing shares of GDP resides in “economic commodities that have little or no physical manifestations”.21 ICAI 12/22/2012
  • 22. Intangible Assets  The recognition of the weight of intangible assets is not limited to brands as given by the brand valuations.  Intellectual property – patents, trademarks, human, relationship, stra tegic and structural capital – is considered a critical competitive weapon for today’s leading organizations.  Yet traditionally strategic development has not even begun to approach the value of such intangibles.22 ICAI 12/22/2012
  • 23. Shifting of Markets  Markets Are Shifting  The Social Era implies a change in the nature of markets. It is not grafting or suffixing social to past strategies. Think Social.  Separation between work - leisure, home - work- place, intermediate good - final output, consumer – producer disappearing.  This is not a temporary shift it is permanent.  At the core of business in the Social Era is the recognition and emphasis of intangible capital as the core for creating, sharing and improving value continuously.23 ICAI 12/22/2012
  • 24. Some Expert Opinion  Social media is recognized as the fourth-largest source of risk over the next three years, according to a recent report from Deloitte and this puts social media on par with financial risk. (“Social Media Risk Is Like Wildfire. Where’s the Fire Engine?“ Kasia Moreno; Forbes Insights, “Aftershock: Adjusting to the New World of Risk Management.”)  Executives interviewed for the report indicated that the social media risk is rising; cyber attacks, breaches of confidentiality, fast-spreading malicious rumors about the company, as well as financial disclosures.  “Everybody is walking around with a smartphone, and things can be captured and digitized instantaneously.24 ICAI 12/22/2012
  • 25. How Executives React  A higher percentage of executives (37%) from the consumer and industrial products industry placed social media among the top five sources of risk than did executives from the technology sector (24%) or life sciences (18%). Clearly, the consumer products executives recognize that using social media for marketing to consumers puts them at risk of damage to their ICAI25 12/22/2012 reputations.
  • 26. Definition  Risk management is the identification, assessment, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives, whether positive or negative) followed by coordinated and economical application of resources to minimize, monitor, and26 control the probability and/or impact ICAI 12/22/2012
  • 27. How to Manage?  The strategies to manage risk typically include transferring the risk to another party, avoiding the risk, reducing the negative effect or probability of the risk, or even accepting some or all of the potential or actual consequences of a particular risk.  Most of the traditional risk associated with individuals and corporations are tangible risk while most of the social media risk are intangible risk.27 ICAI 12/22/2012
  • 28. Intangible Risks  Intangible risks are things that are recognized but not easily quantified. A common example is an economic intangible which is something not easily quantified within a given theory of economics. Social media activities contain risk of intangibles such as:  Customer good will, employee morale, market sentiment and aesthetic appeal (i.e. negative reaction to a twitter post).  Positive or negative conversations online that effect the perceptions of trust or quality  An expenditure of time and effort on an activity by a person (such as leveraging know- how, knowledge, collaboration, relationships, systems, and process)  A defensible legal property right conferred by a Legal Act (copyright, trademarks, patents, designs, customer lists), or financial transactions (R&D, goodwill, intellectual capital)  In business, intangibles are commonly referred to as intangible assets or intellectual capital28 ICAI  Leadership, maturity, team chemistry, network effects and others. 12/22/2012
  • 29. Examples of Measurement of Intangibles  Booms and Busts  Bears and Bulls29 ICAI 12/22/2012
  • 30. Behavioral Analysis of markets  Study of market psychology- not individual psychology posited to markets.  Data output created by human reaction to greed and fear thresholds is measurable.  Future market can be predicted for hours, days and years.  Human beings are to repeat both positive and negative behavior exhibited by past generations. ( Even after Emu we still have problems of Greed)  Traditional cycle is too long. Shorter ones are represented by fractals/recursions.30 ICAI 12/22/2012
  • 31. CROWD of a FEW  Managing the risk of intangibles is new ground for most risk managers. Managing the risk of social media is not even in the job description for risk managers. None of the insurance brokers or insurance companies have “social media risk management practices”. In other words there is a gap of “knowledge inventory supported by knowledgeable resources on the subject matter”.  Given the rapid state of change surrounding social media practices, the risk are likely to increase over time. Maybe it is time that a “crowd of a few” form and collaboratively begin to address these issues on behalf of the many. The emerging risk of a31 ICAI 12/22/2012 transparent marketplace of conversations can only be
  • 32. You are the Crowd of Few32 ICAI 12/22/2012
  • 33. Thank you  Questions  profkprabhakar@gmail.com33 ICAI 12/22/2012