Adam Efrima, co-founder of Blox.io, takes a look at the importance of process automation explaining how a single human mistake can dramatically hurt (if not destroy) your business.
Like every industry, a crypto company’s employees can be its strongest asset, but also its biggest risk. Not only are vulnerabilities like cyberattacks on the rise, but humans are imperfect beings whose errors can represent great danger to their organizations.
Smart and automated technologies are common in traditional fiat accounting, but when it comes to crypto accounting, many companies are simply unaware of automated solutions. Traditionally, they leave their finance teams to handle basic accounting and bookkeeping tasks manually. Relying solely on employees for tasks that can easily be automated, can expose the business to serious risks and leave your team feeling unempowered and unproductive.
Here are several ways in which a single mistake can dramatically hurt your organization.
The Financial Cost of Human Error
Human error can be expensive. Even something as innocuous as publishing a report ahead of schedule can have serious repercussions. J.P. Morgan Chase & Co.’s stock price tumbled 3.6 percent several years ago after a communications company released its third-quarter report at 3:30 AM instead of 7 AM.
The press release revealed that the company fell short of its profit and expense projections, and J.P. Morgan wanted it released at 7 AM because the information was market-sensitive. Simple human error at the communications company Shareholder.com led to the early release and the immediate drop in stock price.
In another example, the 2010 market saw a steep drop in stock prices simply because a trader entered the word “billion” instead of “million” when making a trade. These aren’t exactly complicated mistakes. They’re accidents, and they can cause significant disruptions in the value of a stock, and ultimately, a businesses bottom line.
A Loss of Reputation
One person’s slip-up can jeopardize a company’s reputation. Take the 2017 Equifax data breach as a case in point. The company revealed that the breach was caused by one employee who had ignored important security warnings and did not install software patches that otherwise would have prevented the breach. The employee’s neglect over security led to the exposure of roughly 146 million Americans’ personally identifiable information (PII).
A year after the breach, Americans were still keenly aware of the event. Nearly 73 percent of those surveyed said they knew about it and a third said that their own data was compromised in the incident.
That widespread, lasting awareness of the incident will linger in the public unconscious. The severe impact of the breach will likely continue linger on, greatly affecting the company’s reputation and brand.
Proprietary Information in Jeopardy
Your employees deal with vast amounts of data all the time, but they’re not always thinking about safety. Forbes reports that employees often share company information via services that aren’t necessarily secure. They send highly important data over email or upload company files to external cloud services without ever thinking of security concerns.
But there’s no guarantee these services aren’t being monitored by potential bad actors. Employees may unwittingly share proprietary information or otherwise compromise your business’s competitive position. Insider threats like mistaken data exposure or deliberate negligence not only put proprietary information at risk but also can cost businesses $8.7 million a year.
Exposure to Lawsuits
Prominent U.S. electric scooter companies came under fire in a class action lawsuit accusing them of gross negligence, as a result of a rising number of serious pedestrian industries. The complaints included poor safety guidance and faulty manufacturing, indicating a human error at multiple human touchpoints in the company. Whether deliberate or rooted in innocence, those errors have led to legal troubles and a loss of public trust that no company can afford that.
Deteriorating Customer Loyalty
When Australia’s Commonwealth Bank lost the financial records of 12 million customers, it cost them customer confidence and loyalty as well. A subcontractor of the country’s largest bank reportedly lost tape drives that contained 10 years of customer bank statements.
The loss occurred in 2016, and while the bank reported it to the appropriate regulatory authorities, they didn’t reveal the news to the customers that were affected. The bank said no PII was lost in the incident, but the audacity of the situation remained unbelievable. This poor handling of customer data highlights a lack of transparency that surely shook public perception of the bank.
Amazon also shook up customer perception when its Simple Storage Service servers went down for several hours in 2017. The cause was once again due to human error, as an employee entered a command incorrectly. Instead of taking a few servers offline to address a bug in the billing system, they took down many more than expected. That single typo cost U.S. financial institutions $160 million.
Lost Business Opportunities
Companies around the world have suffered as a result of human error. Bidders on a massive U.K. rail project saw the process upended by spreadsheet modeling mistakes. More than 400 British Airways flights were canceled during a holiday weekend because an employee unplugged a critical power source, causing a power surge that damaged the company’s IT infrastructure when he plugged it back in. We, humans, are capable of causing substantial yet preventable damage.
This is not about removing humans from your organization. It’s quite the opposite of that. If you really want your finance team to perform its best, look for ways to free up the time they spend on tedious manual work. Focus their time, energy, and resources on more challenging, impactful work that can’t be automated.
Adam Efrima, co-founder of Blox.io. Adam is a blockchain entrepreneur and active member in the Chinese Financial and Fintech industry, living in Shanghai for over 8 years. Adam previously served in leading roles at the Chinese financial conglomerate, CITIC, and eventually founded the Shanghai office for eToro. After being deeply involved in the blockchain space for several years, Adam went on to co-found Blox.io, where he leads the Blox China headquarters, with plans to expand across APAC