Is Digitization a Risk for the Mining Industry?
Digitization is upon us — there is no denying this fact. As companies increasingly become connected, the era of digitalization will continue to create disruptions and bring about lots of business opportunities. The shift to digital technologies has changed how companies view risks and what actions need to be taken to mitigate them.
In this article, you will learn what exactly digitization is in the context of the mining industry, and whether it's a risk or opportunity for companies in the sector.
What is Meant by Digitization?
Digitization refers to using technologies to improve processes and gain efficiencies. The concept is broad that can be applied to managing different aspects of a company's operations — decision automation, process automation, and digitized monitoring of internal processes, optical-character recognition, work-flow automation, and advanced analytics. It includes the use of artificial intelligence and machine learning for improved work processes.
Essentially, digitization involves any process that makes use of technology for data analysis, communication, and environmental analysis with the end goal of improved operations.
Digitization in the Mining Sector
We have already witnessed digitization taking root in the mining sector.
Last year, Barrick Gold had teamed up with Cisco in order to create connected, safe mines at Cortez site in Nevada, US. The underground Wi-Fi network is paying dividends to the company in the form of increased safety, visibility, and dependability. Mine operator could see what is happening in the mines in real-time by tracking people, equipment, and ore. The company had announced that it wants to expand to program to every location where it operates including Canada, Argentina, Chile, Peru, the Dominican Republic, and Zambia within the next three years.
Mining companies are investing in advanced sensing technologies that help in decision making. Real-time operational data obtained through the equipment can lead to increased worker safety and productivity. Using predictive algorithms leads to enhanced precision regarding maintenance decisions. In addition, the use of technology helps in creating greater transparency with local partners, community members, and government organizations.
Digital technologies help mining companies make decisions with greater accuracy, speed, and productivity. It helps companies investigate and mitigate risks relating to different operations.
Real-time data and predictive tools allow mining organizations to collaborate in mining exploration and development projects. An enterprise-level analytics hub helps in operational and financial benchmarking. It allows the management in performance assessment, portfolio management, and risk management.
Lastly, digitization of processes helps mining companies to improve safety and environmental performance. Predictive analytics and data management help the management to improve conversation of water and energy resources. It helps in meeting regulatory requirements to curb emissions and become more accountable to stakeholders.
Risks of Digitization in the Mining Industry
While it cannot be denied that digitization has greatly improved the operational performance of mining companies, it has also exposed them to certain risks.
Perhaps the greatest risk of digitization is online attacks.
With increasing digitization, sensitive data and processes of mining companies become exposed to online threats. Hackers can break into systems with weak security in order to steal confidential company file.
That being said, not all online attacks come from outside the organization. An IBM’s 2016 Cyber Security Intelligence Index had found that:
"Nearly 60 percent of online threats come from people inside the organization who can gain access to confidential data related to mining operations of the company."
Confidential company information can be 'sold' to competitors that can result in great loss for the company. These attacks can threaten the very survival of the company. As a result, it's essential for mining companies to come up with a concentrated plan to address and eliminate the digitization risks.
How can Mining Companies Address Digitization Risks?
Mining companies should take a modular approach in order to address digitization risks. They need to create a comprehensive digital security plan to safeguard important information. It may require undertaking a large-scale project in order to achieve significant advances in both effectiveness and efficiencies in network security.
When implementing digitization processes, it's important to carry out a comprehensive risk analysis and review (CRAR). Robust security controls should be implemented to identify and eliminate threats. This requires a test-and-learn approach to detect vulnerabilities and address them in a timely manner. It involves testing solutions to identify vulnerabilities. Once the vulnerabilities have been detected, effective security control measures should be devised to reduce the risks.
Improving the effectiveness of risk management approaches can help reduce the risk of digitization. Mining companies need to implement risk control measures at regional, multiregional, and global levels. They need to create a comprehensive strategy to identify, assess, and reduce digitization risks.
Remember that initiating risk mitigation efforts should involve C-level executives and business line managers. It's should not be considered a concern of the IT department. Support from the upper management will help in creating a unified strategy to address risks and vulnerabilities. This will help create a robust security governance framework that can help respond to attacks and protect critical company assets to maintain business continuity.
Mining companies can reinvent themselves by adopting digital technologies. They can cut costs and improve the efficiency of operations. It will help them to improve regulatory compliance and cut operational costs. This transformation will help companies to effectively meet the challenges due to dwindling mining resources, low demand, and rising costs.
As the business processes of mining companies get digitized, it's important to implement a robust risk mitigation process to protect confidential data. Mining companies need to centralize the security control process consolidating external risk information in addition to implementing broader risk management operations. This is necessary to secure critical data while making the most of the opportunity presented by digital technologies.