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QUESTION 10B: Technology Risk Governance (20 marks)
Format: Board Governance Paper
TO: Board of Directors
FROM: Chief Technology Officer
DATE: [Current Date]
SUBJECT: Technology Risk Governance Review - Automation Strategy Assessment
EXECUTIVE SUMMARY
Following the complete robot system failure that halted production operations, this paper evaluates MC's technology governance framework and automation strategy. The analysis addresses optimal human-technology balance, redundancy requirements, and enhanced oversight mechanisms to prevent future single-point-of-failure scenarios while maintaining operational efficiency and employment considerations.
AUTOMATION STRATEGY EVALUATION
Current Technology Dependencies
MC's production infrastructure demonstrates excessive reliance on automated robot systems across all four production lines without adequate manual backup capabilities. This configuration creates catastrophic single-point-of-failure risk because any system-wide malfunction immediately eliminates 100% of production capacity. The recent 48-hour shutdown illustrates the vulnerability of over-automation without resilience planning.
The technology investment has delivered significant efficiency gains, enabling 16-hour daily operations with minimal labor costs and consistent quality standards. However, the automation strategy failed to incorporate risk mitigation principles because it eliminated rather than supplemented human operational capabilities. This approach contradicts enterprise risk management best practices requiring redundancy for critical business processes.
Cost-Benefit Analysis Reassessment
While automation reduced direct labor costs by approximately 60% and increased production consistency, the hidden costs of technology dependency now require evaluation. The 48-hour production loss of £57,600 plus customer retention risks demonstrate that savings from reduced staffing may be offset by operational vulnerability during system failures.
A hybrid operational model combining automation efficiency with human backup capabilities would increase operational costs by approximately 15-20% but provide essential business continuity insurance. This investment in resilience should be evaluated against the cost of production interruptions and reputational damage from service failures.
OPTIMAL HUMAN-TECHNOLOGY BALANCE
Hybrid Production Model Design
MC should implement a hybrid production model maintaining 70% automation capacity supplemented by 30% human operational capability across all production lines. This configuration enables automated efficiency during normal operations while providing immediate manual backup during system failures. Human workers should be trained as technology operators and manual production specialists, creating operational flexibility.
The hybrid approach addresses employment concerns by retaining skilled workers rather than eliminating positions through automation. These employees provide technology oversight, quality assurance, and crisis response capabilities that pure automation cannot deliver. Investment in cross-training creates multi-skilled workforce capable of seamless transition between automated and manual operations.
Skills Development Framework
Workers should receive enhanced training combining technology operation, manual production techniques, and problem-solving capabilities. This upskilling approach positions employees as technology partners rather than automation casualties, supporting positive organizational culture and employee engagement. Skilled workers provide valuable oversight identifying potential system issues before complete failures occur.
The company should establish clear career progression pathways for technology-hybrid roles, demonstrating commitment to employee development and retention. This approach addresses potential resistance to automation while building internal capabilities for technology governance and operational resilience.
REDUNDANCY REQUIREMENTS AND GOVERNANCE
Technical Redundancy Implementation
MC must implement multi-level redundancy across critical production systems including backup robot units, alternative automation platforms, and manual equipment maintenance. Each production line should have immediate backup capabilities preventing system-wide failures from individual component malfunctions. This redundancy investment provides operational insurance against technology risks.
Preventive maintenance programs require enhancement with predictive analytics identifying potential failures before operational impact. Regular system testing and backup activation drills ensure redundancy systems function effectively during actual emergencies. Technology vendors should provide guaranteed response times and on-site support commitments.
Governance Oversight Structure
The board should establish a Technology Risk Committee with dedicated oversight of automation strategy, system reliability, and operational resilience. This committee requires independent technology expertise, operational risk assessment capabilities, and regular reporting on system performance metrics. Monthly risk assessments should evaluate technology dependencies and mitigation strategies.
Key performance indicators should include system uptime percentages, backup system readiness, manual operation capability, and recovery time objectives. The governance framework must balance efficiency optimization with resilience requirements, ensuring technology investments enhance rather than compromise business continuity.
EMPLOYMENT AND CULTURAL IMPLICATIONS
Workforce Transition Management
The hybrid model addresses employment concerns by repositioning workers as technology partners rather than replacement targets. Employees gain enhanced skills, operational flexibility, and career development opportunities while providing essential resilience capabilities. This approach supports positive employee relations and reduces automation-related resistance.
Clear communication about automation's role in supporting rather than replacing human workers helps maintain organizational culture and employee engagement. The company should emphasize how technology enables workers to focus on higher-value activities including quality oversight, customer service, and operational optimization.
Cultural Integration Strategy
MC should develop organizational culture embracing technology as workforce enablement rather than workforce replacement. Regular training, communication, and involvement in automation decisions help employees understand and support technology investments. Employee feedback on operational improvements provides valuable input for technology development and optimization.
Recognition programs highlighting successful human-technology collaboration demonstrate the value of hybrid operations. Career development pathways combining technical skills with operational expertise create attractive opportunities for workforce advancement and retention.
RISK ASSESSMENT AND MONITORING
Technology Risk Framework
MC requires comprehensive technology risk assessment covering single-point-of-failure scenarios, vendor dependencies, cyber security vulnerabilities, and operational continuity planning. Regular stress testing should evaluate system resilience under various failure scenarios including partial automation loss, complete system failures, and extended recovery periods.
The risk framework should incorporate both quantitative metrics including system uptime, recovery times, and financial impact assessments, and qualitative factors including vendor reliability, technology obsolescence, and skills availability. Monthly risk reporting provides board oversight of technology dependencies and mitigation effectiveness.
Continuous Improvement Process
Technology governance requires ongoing evaluation and adaptation based on operational experience, industry developments, and risk environment changes. Regular reviews of automation strategy, redundancy effectiveness, and workforce capabilities ensure the hybrid model remains optimal for MC's operational requirements and risk tolerance.
Stakeholder feedback from employees, customers, and operational teams provides valuable input for technology governance improvements. The governance framework should enable rapid adaptation to changing technology landscapes while maintaining operational stability and risk management effectiveness.
RECOMMENDATIONS
- Implement hybrid production model with 70% automation and 30% human backup capability across all production lines
- Establish Technology Risk Committee with board-level oversight and monthly risk reporting requirements
- Develop multi-level redundancy systems including backup equipment, alternative platforms, and manual capabilities
- Create workforce development program combining technology operation skills with manual production expertise
- Institute regular resilience testing including backup system activation and recovery time validation
CONCLUSION
The automation failure demonstrates the critical importance of balancing efficiency optimization with operational resilience. A hybrid model combining automation benefits with human backup capabilities provides optimal risk management while addressing employment and cultural considerations. Enhanced governance oversight ensures technology investments support rather than compromise business continuity and stakeholder interests.
Professional Skills Demonstrated:
- Scepticism: Questioned over-reliance on automation without adequate risk mitigation
- Evaluation: Assessed multiple governance models and risk management approaches
- Analysis: Examined cost-benefit implications of hybrid versus pure automation strategies