Unintended consequences in the IoT

Revisiting this excellent guest blog post from Andrew Yeoman, CEO of Concirrus who was the first person we’ve heard define IoT in terms of BUSINESS, not TECHNOLOGY.

“The Internet of Things allows you to know information that you previously couldn’t economically know. With that knowledge, you can operate a different business process.”

He also got us thinking about the unintended consequences and was kind enough to write this. Food for thought.

Boy Racer

As the Internet of Things boom starts on its way we are bombarded with the ‘sense of possibility’. We’ve all seen the estimates on how many connected devices are going to be out there (100s of billions) and the massive profits that this will generate ($trillions) and there is no doubt that the IoT will have a profound impact on the way we live our lives and the way that business is done today.

From cars to fridges, from smart meters to oil tanks, our businesses, assets and lives will be monitored, managed and optimised. We can be certain that our lives and businesses will be impacted in ways we could never have imagined. Being successful in the use of these technologies does require us to consider both the returns and the risks. Each of these requires a change in our thinking.

We believe that in the future there will be two types of businesses – those that embraced the Internet of Things (or whatever it is called at that time) and those that used to exist. However in the enthusiasm to embrace this technology its important to consider the ‘unintended consequence’ of this technology.

Take for example, car insurance – we see a rush to adopt telematics (an early part of IoT) in the underwriting process. The use of this technology is fascinating, by observing the driving behaviour of the policy holders, the insurer can ‘see’ who is a good risk and who is not. Using this information they can actively manage their ‘book of risk’ by pricing out or forcibly ejecting those that are ‘high risk’. This marketing is surging… and why not as the improvement in underwriting returns is frankly staggering.

However, the law of unintended consequence is equally busy at work…

Prior to telematics, an insurer operated with hindsight and knew only of incidents and accidents some time after they occurred. However now they are ‘connected’ they receive information in near real-time. So when a car crashes and ends up on its roof, the insurance company ‘knows’ about this even in the middle of the night. What obligation now exists on the insurer to act? When the occupants of that vehicle sue for injury and suffering because they lay in ‘that field’ for several hours what liability exists? For sure, we can be certain that this will be tested in court?

When a driver has an accident and it can be shown that this driver had been driving recklessly for weeks prior to the accident and yet the insurer failed to act then who has what liability?

So where else do we see this?

How about in houses and homes? This year has seen the acquisition of Nest by Google but what could possibly go wrong? When your meter readings are hacked and it can be seen that your reduced consumption shows that you are on holiday who could be liable for the consequential loss? When the thermostat incorrectly assesses your presence and switches on heating unnecessarily using gas/oil/ electricity then can you claim that from them?

What the Internet of Things is, is another new set of technologies and much like the last revolution we say, with the Internet, it is not utopian. Like the very best business plans both the opportunities and the risks need to be considered and addressed.

Bring on the information revolution… it’s been 10-years since we saw the last one.