Davos: The “combined value” of digitisation to society and industry could reach $100 trillion over the next 10 years — but this transformation also brings with it risks, according to new research released by the World Economic Forum at its annual meeting here on Friday.
With digitisation affecting every industry and creating new ways of capturing and creating value, the research focused on the “combinatorial” effects of digital technologies — mobile, cloud, artificial intelligence, sensors and analytics, among others.
Examples of societal value generated by digitization include mass adoption of autonomous vehicles and usage-based car insurance, which could save up to one million lives a year worldwide by 2025, the WEF said.
In the electricity sector, a cumulative reduction in carbon emissions worth $867 billion by 2025 could be achieved through the adoption of digital technologies, principally through smarter asset planning.
The pace of innovation can be illustrated by the fact that while it used to take Fortune 500 companies an average of 20 years to reach one-billion-dollar valuation, digital start-ups are reaching the same milestone in just four years, said the report.
The research suggested that once limitations preventing the mass-market commercialisation of enabling technologies such as battery storage and wireless charging are overcome, the pace of change could accelerate.
However, the digital transformation of industries comes with risks attached that will require careful management by all stakeholder groups. One such risk is inequality, which could be exacerbated if access to digital skills is not made available to all.
Another was trust, which has been eroded by growing concerns over data privacy and security. This will only be overcome with improved norms of ethical behaviour, according to the report.
When it comes to business, benefits are by no means guaranteed. Conservative corporate cultures and short-termism combine, for example, to discourage many businesses from taking radical steps to disrupt their own industry by embracing new technologies.
“Society and the environment stand to gain the greatest share of the rewards from digitization through improvements to welfare, health and other means,” said Mark Spelman, co-head of WEF’s Future of the Internet Initiative.
“To capitalise fully, however, policy-makers must put in place an agile regulatory environment and incentive mechanisms that unlock investment, while businesses must fully embrace sustainable business practices. There is a win-win for business and society if we can look beyond immediate commercial gain in favour of long term value creation,” he added.
Over 2,500 leaders from various sectors are participating in the 46th WEF Annual Meeting in Davos-Klosters, Switzerland, from January 20-23.