How CIOs can manage frictions of digital sovereign risk: Gartner

Digital sovereign risk is a focus area for CIOs managing multinationals as they work to implement digital technology initiatives, according to Gartner research.

The report reveals that geopolitical risks such as incompatible protocols, regulatory obligations, digitally isolated markets and restricted technology providers may affect business operations.

According to the authors, in order to navigate the business risks that have come as a result of public policy, CIOs need to monitor risks by leveraging regular digital sovereign risk assessments in each country of operation, and create a contingent metatopology.

“CIOs should be seeking the appropriate routes into the Board of Directors and executive leadership teams to ensure the risk is understood and factored into digital technology initiative decisions,” the report says.

Legal complexity

As governments respond to digital threats with public policy, compliance obligations increase for multinationals and legal complexities can arise that impact the digital free-market.

CIOs are dealing with incompatible regulations across varied legal jurisdictions as well as across differing technology domains.

According to the report, “Legal complexity is not solely a function of ballooning regulations within a domain like data protection.

“Compliance with one country’s data protection regulations may not be possible while simultaneously complying with another country’s surveillance regulations.”

National digital infrastructures

The second digital free-market friction is national digital infrastructures where collective digital systems across business and consumer environments are incompatible with those in other countries, the authors say.

Standards and protocols in some countries are distinct from global standards, such as China’s New IP protocol network and Russia’s RuNet sovereign internet.

“We are now seeing governments advancing new protocols for specifically political reasons with full knowledge that they will be creating incompatibility problems.”

Stresses on the supply chain as a result of trade tensions can also cause instability and affect enterprise.

For CIOs to respond to these frictions, they must determine whether it is necessary to create nation or region-specific technology stacks.

“With the main market determined, CIOs must then look at the degree to which the legal complexity and digital national infrastructure of a specific country require a deviation from the technology used to operate in the main market.”