Why we need to rethink the way we build trust and manage risk

In this Innovation Realized episode, Jeanne Boillet, EY Global Accounts Committee Assurance Lead, discusses the importance of addressing emerging risks, the role of AI in organizations and how to establish trust.

Key takeaways:

Develop a mindset focused on what lies in the future, not the past.

Stay informed about emerging risk and disruption, always.

Accept the pace of change, learn to adapt.

Foster a culture of strategic resilience throughout the organization.

“Assuring” AI is a collective effort, a shared responsibility between users and board members that set the tone.

Without effective training, generative AI (GenAI) can be misused, leading to lost opportunities.

Clear and transparent communication is paramount in building trust.

Use climate change as an opportunity to generate long-term value.

Stay curious, continue to learn.

For your convenience, full text transcript of this podcast is also available.

Narrator

Hello and welcome to the EY Innovation Realized podcast series by Elevation Barn.
Our world is characterized by more forceful changes that appear quicker, trigger more interconnected and widespread impacts, and often strike all at once. Some call this the poly crisis or perma crisis. Whatever you choose to call it, the bottom line is a business climate that has become far more complex. This environment requires leaders to rethink core assumptions, challenge to establish assumptions, and rethink best practices that no longer work.
This Elevate series will bring you inside the 2024 EY Innovation Realized Global Summit to hear the new ways of thinking our complex world requires. Each episode is a provocative one-on-one conversation between a leader exploring these vital topics and impact leader, Will Travis, founder and CEO of Elevation Barn.
Elevation Barn is an international community of world leaders and experts focused on unlocking a purpose-driven legacy for sustainable personal and business growth. To learn more, visit elevationbarn.com.
And now to your host, Will Travis.

Travis

Jeanne Boillet is EY Global Accounts Committee Assurance Lead.
She drives change by helping implement - at scale - new ideas to advance innovation and better serve clients. Her key focus is addressing the risks and opportunities seen with the accelerated pace of change in technology, and adapting the talent model to best serve stakeholders' needs and the new generation of talent.
Jeanne has been with the EY organization for more than 30 years. In her previous role leading the global innovation roadmap for EY Assurance, she has been successful at pioneering emerging solutions around analytics, AI, and blockchain.
Welcome, Jeanne.

Boillet

Thank you.

Travis

So today, we're going to go a little bit deeper and understand your philosophy and how you're approaching all the grand challenges that are out there. So, I want to start with a question about the world and that it feels that these days, we face extremely complex challenges, disruptions that seem to be quicker and more impactful and more interconnected. What's your view on these trends and their impact on [the] risk climate?

Boillet

It's true that clients are facing huge challenges today.
In order to keep up with the changes and disruption, they need to adapt and accept the pace of change, which requires them to address it. And, also, something that strikes me, is that disruptions overlap and interconnect more and more. So it's, how are you able to contemplate the whole spectrum of all the assumptions of things that can happen to you?
There is, by the way, a survey which is called the EY Global Risk Survey, which was issued in 2023, saying that not only is the nature, but the number of risks is increasing. An example being a supply chain disruption, geopolitical events, and not a surprise, cyber-attacks, data breaches, misalignment of culture, also, new market entrants, and increased remote and distributed work, to name a few.
So sometimes businesses don't have the time to really scan the horizon, and they have to prepare a plan that can be rolled out. It's more a question now of a sense of urgency and thinking about risk of tomorrow with the mindset of the future, but not the mindset of the past. And this shift in mind, is something that was described, by the way this morning and the roundtable around rethink, and I think that businesses, now, need to adapt at a more rapid pace. And they need to be a lot more agile than they were before. And 60% of boards, by the way, agree that emerging risk is insufficiently anticipated by management.
So, what is critical, if I had to summarize a key point? First of all, management should ask themselves, are they addressing the right risk? First question. Second question, are they receiving the right information to make decisions? And do they have the right reporting, and the right data? So, the quality of accuracy of data is another one. And the third one for me is the most important, now you need to embrace the whole ecosystem you are working in. So, you [are] just not limiting yourself to what's happening within the company, but also outside of your company, how you deal with your stakeholders, what are the risks to the overall ecosystem, and that's for me, it's really something new. So, to cope with the magnitude of change, I think we really need to make sure that we address all connected problems.
So, connection is a key word to summarize the overall disruption of what I said so far.

Travis

Fantastic, and given the rapid adaption of GenAI, what do you see as the biggest risks facing organizations today and whose job is it to assure users that AI is trustworthy and reliable? And could you say how that could be achieved?

Boillet

Yeah. I’d like to summarize the different situation that we are facing with corporates at the moment when it comes to AI.
First of all, you have one category, which is the category of those who do not want to move at all. So, they consider that they are doing the right things at the right pace, and [are] just static. In that case, of course, there's a risk of disruption, of being disrupted, [which] is huge.
Second category is a risk, and this is a situation that we see the most, I would say, not moving fast enough. And what are the reasons for not moving fast enough? I would say there are a few. The first is about the skill gap. Second, is about the infrastructure to deal with new technology. And third is about the quality of the data. So, it's to protect, sometimes, not to move because it's until we don't have the right data, or we don't have the right system, or we don't find the right resources, we prefer not to change, or we do it at a pace, that is our pace. And maybe it's not necessarily sufficient to really go in the right direction, given the pace of what we described before.
And then we have the subcategory, which is a risk of moving too fast. And what are the consequences of doing that? I would characterize it as being a situation where, especially in our profession, by the way, if I take the example of the audit profession, you need to train people. And on-the-job training is something really important. I was always looking at my senior partner, the way he was behaving and interacting with a client. And the risk is that you just apply AI, and it's to replace people. And the people have no time to really get trained. And what is really important with GenAI is really to have the skepticism and the judgment to apply the tool at the right moment with the right thing and the right environment. So being properly trained is something that is required as well when it comes to GenAI. Otherwise, you can misuse, I would say, the potential of GenAI, which, to me is a missed opportunity. We can see some of that.
And then the last one is about the risk of missing the big picture. And just applying GenAI for the sake of applying GenAI, and it's really important to not lose track of what's your purpose for the company and what you want to stand for and keep your Northstar, rather than trying to be on top of things with fancy things and having your employees doing whatever they want.
So, to summarize, I see three major risk categories when it comes to Gen AI.
First of all, it's about privacy, and it's cited by 32% of the respondents of the survey we mentioned. The second is about transparency and explainability of what you implement. You need to understand what's behind the algorithm, etc. And the third dimension is a risk of discrimination and bias and lack of fairness, which is also the third category of risk mostly cited by people.
So, as an auditor, I'd like to flag the key element to have in mind when it comes to GenAI and address risk. You need to have the right governance, making sure that AI is managed properly. Second, you need to consider the regulatory environment, making sure that you don't violate contractual agreements or laws or regulations. So, making sure that your people are properly trained, we mentioned that already. And third, making sure that GenAI is not used to perpetrate fraud.
So, everyone within the organization, and to answer your second question of how to assure that the tech is used in the proper way, I would say it's a collective effort. It's not just one person within the organization who can take care of that. It has to be a shared responsibility between the users, the board members, who has to set the tone or making sure that the management is setting the right tone. It's about developers and operators that need to prioritize ethical practices. It's about regulators we have to introduce a framework to apply and we have already two of them as with the EU AI Act, and also in the US with the Executive Order paper that was produced with the Biden organization. And last, but not least, the consumer must encourage appropriate usage of AI with a responsibility behind that.

Travis

Trust must be a huge factor with this. Like research like the Edelman Trust Barometer is showing that it’s really declining and it’s going across the board everywhere, these insecurities are putting so much pressure on everybody. What do you think’s driving that? Because it's a two-sided sword, it feels like you could get more trust because you have the data. But the barometer is saying it's going down.

Boillet

Yes, on this one, I feel that the more people don't understand what's happening, the more they are frightened. So, the more you get into innovation, if you see that innovation, for example, is managed by the politics, people lose complete confidence in the system, and then they lose trust. So how we can regain and bring trust in the system is really something that should be on top of the agenda of society overall.

Travis

How do you do that? How, do you reframe trust and bring that back into the organization so that you can handhold people and make them feel that they’re safe?

Boillet

It's really a great question. And, by the way, we are [at] the Innovation Realize event and it's all about rethink. So, it's about rethink risk. It's about rethink trust and rethink confidence. One comment I’d like to make is that with the increasing speed of implementation of technology, people get frightened because they don't understand.
For me, there is a big difference - it was mentioned by the way, on the panel this morning - there is a big difference between knowing and understanding. And I think that one of the reasons why people are losing traction and losing confidence is that they know that this is happening, but they don't understand what it means for them. So, how [you] bridge the gap and come back to something which people can understand, I think, starts with communication. It starts with transparency, you see. It's about clarity of what we try to achieve with the tool rather than imposing things. I said that already, but when it comes to innovation, people are concerned that politics has too much influence on science at the moment. So, they completely lose momentum on [what is] the impact of innovation on society. So, it's critical to restore trust in the promise of innovation to ensure the implementation is as important as innovation to establish a partnership also between business and the public sector. We see that more and more. It was discussed at COP 28, by the way. And [we need to] integrate science with society in ways that build trust, [which] really [is an] expert recommendation.
So more broadly, I would say that the more you increase the speed of change and the uncertainty, the more you create a sense of instability and undermining trust in business and everything you do. In addition, with COVID-19, it didn't help, as you know, not surprisingly. And looking at the World Economic Forum survey, 54 % of respondents anticipate some instability and global catastrophe to increase. So, this is one driver, which is about instability and how to make sure that also the information or the misinformation is not increasing the impact or the feeling of uncertainty on top of everything I described already. So, cybersecurity is a key element in the overall ecosystem, and because we have seen a significant loss in trust, for example, resulting from an incident where sensitive consumer data has been compromised.
So, bringing confidence and trust for me has never been as important as now. And the role of the auditor in this context is more than ever critical because, given our independence, the professional skepticism that we apply in this context, it's absolutely critical to bring confidence to the market and to the investor overall. And within the organization, you know, you have four lines of defense, right? You need to keep this framework and provide it as a line of defense, agile enough to adapt to a new environment. Because if we keep the line of defense as is without changing a little bit the framework in which they work to address the risk of tomorrow, then you are not able to address and bring the trust that the organization now needs.

Travis

So great to hear that you guys are thinking like this. So, go back, right, you've got the companies rethinking their approach to risk management for today's environment, are there new mindset skills, competencies and approaches that they need to develop internally and with partners to be able to achieve this?

Boillet

Interestingly, when you think about [it], there was a question this morning about behavior, what kind of behavior or competency do you need to rethink? And I think one characteristic is around resilience, [which] is how you are able to navigate in a complex environment, asking the right questions without putting more stress in the organization than is needed. I think, finding the right balance, the fact that you are addressing questions and being transparent with your people, doesn't mean that you are putting stress in the organization, you will just show people that you are addressing the right questions, the "what if" question, which is something really important. And for me, uncertainty, in fact, is a window of opportunity. And you need to expose yourself to something new, [it] shouldn't be felt as being a constraint, it should be felt as being an opportunity or even being inspirational. And providing purpose to your people, provided that there is informed confidence, that's to me is absolutely critical. Meaning that you have the right process in place, the right framework, and also the agility of adapting to circumstances rather than saying we do as before.
And, last but not least, [it] is about humility. You need to be humble to continuously learn. Within EY we are [a] learning organization. What I'm doing as a partner now is completely different from what I was doing before. And that's what I like. And I keep on learning. For example, on dealing with non-financial data, I had to take 90 hours of training just to understand what CSRD (Corporate Sustainability Reporting Directive) means, just as an example.
So, a culture of resilience for me is based on the three takeaways. The first one is foster a culture where you develop a lot of transparency within the whole organization. Second is to stay informed about emerging risk and disruption, continuously, and make sure that you understand your ecosystem, you share that with different people with the organization, but also outside of the organization, moving with your stakeholders all together. And also, I see the role of the chief risk officer is regaining, I would say, power within the organization. What I mean by that is that I feel that we are going into an environment where we need to have a more holistic approach to business resilience. And it's not just a compliance exercise. It's much more than that. So, the shift of risk analysis from just a compliance exercise to something more strategic is something that I observe more and more in the organization. And, by the way, what's happening with the double materiality metrics concept, linked with CSRD, is also a way to regroup. Or the risk framework as a foundation for the thinking of what is the right strategy for my business. So, putting it at the center for me is a way to address the right question and create the right confidence within the organization, [so] that we know exactly what's happening.

Travis

I'm impressed by the speed of reaction to address these changes in what's happening in the climate. Overall, then, what do you feel is the role of business and businesses in addressing climate risks? And how does that marry with sort of refocusing and generating long-term value for their stakeholders?

Boillet

Climate risk is arguably the biggest challenge facing the world. Just as an example, I was flying over Panama a few days ago and I was looking down, and I saw all the boats around the canal. And I suddenly remembered that there was a big drought at the moment, which shows how climate can really impact logistics. And because water is no longer in the canal, so the boats need to wait, and it's happened in the past, but it's happening more and more. So, organizations need to think about that, when they think about and modernize their logistics plan to take this into account. And they do that, but it's reality. So, the reality is, and through the EY 2023 Sustainable Value Survey, businesses reported, unfortunately, the progress on sustainability is going down, is slowing down, let's say. As an example, there was a decline in progress on greenhouse gas emissions, which is falling from a median of 20%, compared to 30%, in 2022, just to name one topic. And many businesses have also extended their deadlines for achieving their climate goals with the median year shifting backward from 2036 to 2050. That's a reality. This was described at COP 28. What is not helping on top of that is with rising inflation, geopolitical turbulence, this is impacting business.
So, it's a permanent debate between short-term and long-term and how to balance the priorities when it comes to investments and how to accelerate sustainability in this context, it's not that obvious, I must say. But despite all these challenges, the survey also highlighted that delivering on sustainability initiatives has significant benefits for stakeholders, this is proven, which is good news. In fact, 52% of the people that have been surveyed, said that the financial value created has exceeded their expectations. So, meaning that when you invest on the right topics, there is a return on investment, and the market sees it, the consumer sees it as well. So, some of the ways that organizations can create long-term value, to address your second question, by managing climate risk, includes more efficient operations, to start with, the development of new products and services, and a shift to an innovative business model. So, for example, business models can be based on a more circular economy as an example. So, for me, the more you address it, not as a constraint, but clearly as something to reshape your business model to differentiate on the market, then you put yourself in the winning mindset.

Travis

Yeah, repositioning that rethink strategy just presents an array of new opportunities. Spectacular. Can I ask another question? Just what we were talking about earlier, as a mountaineer, as you are, which many people may not know, that involves living risk. What lessons do you gain as a leader? Being somebody that takes risks on the mountains, the calculated risks. There seems to be a lot of lessons learned from how you actually live your life in how you actually guide the organization to guide other companies. Do you have a philosophy or a way or approach behind how you look at risk?

Boillet

Yeah, definitely. It's funny, because, by the way, I thought about that this morning. I'm not kidding. When I was listening to the panel, and I thought to myself, what I have learned through my mountain experience is benefiting my professional life. Of course I am always with a guide, but you will learn how to read the mountains, how to read the weather, and how to be humble when you need to be humble. So, the mountain and nature are going to be always stronger than you are. So don't try to fight for things that you know you are not going to win in the end. So, understanding your ecosystem, to make the parallel. Understanding with whom you are in your team and calculating what is achievable or not, and in which timing, is exactly what I live in my professional life, right? And so, I gain, confidence, I was mentioning resilience, that's completely applied to when you do a trip in the mountains, and you can definitely apply that more and more I would say more than ever. Yeah, in the business life.

Travis

And like Hal [Gregersen] was saying this morning, you're thinking about the long game. Because you were saying earlier, which I loved, I enjoy going up more than coming down, which most people, I'm a mountaineer, most people like me, I enjoy coming down and [am] miserable on the way up. But that's where you find the thrill. But is that because you're thinking of the long game, you're calculating everything in the ecosystem, so that the journey up is more enjoyable because, you know [when you]come down, [you know] what to do?

Boillet

Exactly. And it's also this morning, someone was saying you need to be curious. And when you climb, you are curious about what you are going to see at the top, right? When you go down, you know exactly what's behind you. So, it's a way of looking at things, which is to be open-minded, to be curious. And that's what I like as well.

Travis

I love it. You sound like the perfect woman for the job. Fantastic. Jeanne, thank you so much for spending time. And I look forward to hearing more of your incredible work during the rest of the conference. Thank you so much.

Boillet

Thank you.

Narrator

We hope you’ve enjoyed this episode of the EY Innovation Realized Podcast Series by Elevation Barn. If you would like to learn more about Jeanne Boillet, please visit ey.com.
To learn more about Elevation Barn, please visit us at elevationbarn.com.
To find out how EY leaders are helping clients rethink their business approach to unlock value for their organizations, visit ey.com.
To report accessibility issues with this podcast, email connect@elevationbarn.com

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Will Travis
Founder and CEO, Elevation Barn

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Episode 3

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Why we need to rethink the way we build trust and manage risk

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