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Blockchain technology: why boards should pay attention
As blockchain use cases multiply, the technology is becoming essential to operations across sectors, with a wide range of companies not only adopting the technology but regularly finding new applications. Indeed, PwC economists see continuing potential for blockchain to create value in nearly every industry — including healthcare, government, manufacturing, finance and retail — and expect the majority of businesses to be using the technology in some form by 2025.
How will blockchain technology impact boards?
As with other emerging technologies, blockchain opportunities carry risks. To add value and keep transactions secure, a blockchain needs rules of participant engagement and enforcement mechanisms, including for data governance and regulatory compliance. Boards will need to take a holistic approach to cybersecurity oversight given the security and privacy risks as well as risks from threat actors inherent in a blockchain ecosystem. This is paramount in maintaining trust for not only a particular transaction but the organization’s system as a whole.
The board will play a critical role in assisting management with its choice of use cases for the technology, in overseeing its implementation and in monitoring risks that it could pose to the company and other network participants.
Strategic clarity will help your blockchain initiative have a business purpose around which participants can align.
- How will blockchain fit into the company’s strategy? Has management identified use cases for the technology?
- What are our competitors doing?
- Does the company have the skills and resources needed to oversee, implement and maintain the technology?
…read more in the report.
Blockchain may call for competitors to collaborate and communicate in new ways.
- Has management identified and engaged with participants in a given blockchain network?
- Has management considered interoperability with other blockchains?
…read more in the report.
Every blockchain requires rules.
- Have standards been developed for how participants will access and engage blockchain networks?
- Will the blockchain be open to everyone (public) or for a controlled group (private)? What opportunities and risks come with each?
…read more in the report.
Effective processes and controls are needed to mitigate risk and produce audit evidence.
- Are internal controls in place to ensure a blockchain’s effective implementation and operation, timely identification and mitigation of security and privacy risks, and ongoing monitoring?
- How will the blockchain be integrated with current systems and processes?
- How has each network member implemented these processes to ensure data integrity?
- Has management engaged with auditors to see how evidence will be developed and maintained to support transactions recorded on the blockchain?
…read more in the report.
Knowledge and practice need to stay agile to meet regulatory and other requirements as they evolve.
- What is the current regulatory environment, and is there a process in place to monitor regulatory requirements as they evolve?
- What are the compliance, legal and accounting issues that blockchain might pose? Ongoing education Directors need to be brought up to speed on an evolving technology.
- How is management keeping pace with ongoing blockchain developments, and how can the board learn more?
- What internal or external resources are available to give directors a strong understanding of blockchain’s developing opportunities and risks?
…read more in the report.
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