[Opinion] Expanded Risk Concepts for Companies in the Hyperconnected Era

The digital era of the 21st century is characterized by a "hyper-connected society." People around the world are densely connected through networks via devices such as smartphones. Furthermore, with the advancement of sensors and artificial intelligence, connections are being made between humans and objects, as well as between objects themselves. Hyper-connectivity, primarily approached from an information technology perspective, is deeply reflected in the physical daily lives of modern people.

The dining table we encounter every day is a microcosm symbolizing the globally hyper-connected world. We eat food prepared with Australian beef, Spanish pork, French cheese, Italian olive oil, Norwegian mackerel, and American corn, and enjoy dessert with Chilean grapes and Canadian blueberries. The coffee beans we drink are produced in various regions such as Brazil and Bolivia in South America, Ethiopia and Kenya in Africa, and Vietnam and India in Asia, meeting consumers in Korea. This phenomenon is due to information technology acting as a catalyst, leading to the advancement and efficiency of global logistics networks.

Until the mid-20th century, ordinary people’s fresh ingredients rarely crossed borders. Due to the need to maintain freshness, long-term transportation by ship was difficult, and the high transportation costs could not be borne with low prices. However, with the introduction of refrigerated and frozen containers and the emergence of advanced global logistics systems utilizing information technology, agricultural products as daily necessities became part of international trade. Today, with the vast world compressed onto a small dining table, the metaphor of a "global village" has become a reality.

Whether human or object, value is created when connections are made. Isolated humans live by self-sufficiency with limited resources, but connected humans increase productivity through division of labor and live with abundant resources. The same applies to objects. A single telephone is useless, but a hundred telephones become a means of communication, creating value. Against this backdrop, human civilization is essentially a process of connecting. People are connected through language and writing, regions through roads and railways, and industries through trade.

In the hyper-connected society of the 21st century, the value enjoyed in daily life has also increased. We communicate in real time with acquaintances on the other side of the globe and spread our views worldwide through social networking services (SNS). We satisfy diverse tastes by accessing foods from around the world displayed in large discount stores and supermarkets. However, hyper-connectivity also amplifies negative impacts. Computer viruses rampant on the global network are a prime example. In cyberspace, where physical distance and space are meaningless, they infect devices worldwide in an instant, causing enormous economic damage and social chaos. Although vaccine programs have been developed to defend against and eradicate them, perfect solutions are difficult to achieve.

Recently, the so-called "Wuhan pneumonia," the novel coronavirus infection originating in China, has similarly instilled fear worldwide. In the past, when the physical world was not so tightly connected, the spread of infectious diseases from one region to another faced many obstacles because human and material movement was extremely limited. However, in the modern era with advanced transportation and logistics networks, global travel, business trips, parcel delivery, and overseas direct purchases have become everyday occurrences, making it difficult to prevent the spread of infectious diseases even with high-level control and quarantine measures.

The hyper-connected era has dual aspects. While parts that were segmented in the analog era are connected, increasing productive value, destructive aspects caused by viruses and others are also amplified. This phenomenon was defined by Ulrich Beck, a German sociologist famous for "risk society," as the "globalization of risk." From a corporate perspective, opportunities through connections are great, but risks arising from connections also increase, indicating a complex environment. The infectious disease triggered at a seafood market on the outskirts of Wuhan, China, quickly sending shockwaves through Korea’s travel, aviation, distribution, and overall industries, suggests that the scope of risks assumed in corporate management in the digital era must be expanded and redefined through the concept of hyper-connectivity.

Kyungjun Kim, Vice Chairman, Deloitte Consulting