Apr. 15, 2016 | By Kira

For every exciting possibility, opportunity, and grandiose promise of 3D printing technology, there lies the flip side of associated risks, instability, and potential liabilities. To help risk professionals navigate this tricky landscape, Scott Klososky, former CEO of three successful tech startups and partner at consulting firm Future Point of View, recently weighed in.

In every situation in life, be it a new business or even a cooking recipe, introducing new ‘ingredients’ can bring both positives and negatives—the important thing is to know when the risks outweigh the rewards.

Yet for those in the insurance and risk management industries, the field of emerging technology can be particularly difficult to navigate. New factors are constantly being introduced, and often without any exact precedents for them to rely on. The question becomes whether old models can be applied to new technologies, or whether an entirely new rulebook is required.

Scott Klososky

As Klososky puts it, traditional risk assessments have been based on things that happened on the past. Underwriters, for example, look at previous outcomes; they recreate stories and environments to see how one thing led to another, and make an educated prediction about what potential risks could occur in the future. New technologies such as additive manufacturing, however, flip that process on its head.

“Now, unfortunately, with technology, especially something like 3D printing, the magic happens going forward,” he said at the recent RIMS 2016 Conference and Exhibition, as reported in Canadian Underwriter magazine. “The risk comes in when we start experimenting with things that we’ve never done before.”

While we certainly should not be discouraged from experimenting with new technologies—truly, the only way innovation and progress can occur—Klososky has outlined what he believes are the three primary risks associated with 3D printing technology that risk professionals, including insurers, underwriters, and investors, must be aware of.

The first risk, he says, revolves around competitive timing. Simply put, this has to do with getting in on the technology before it’s too late. “In some parts of the economy, you’ve got to learn and do additive manufacturing. If you’re too slow, you will lose market share.”

The second risk is that of intellectual property theft. While this is certainly not unique to 3D printing, the rise of digital technology has made intellectual property protection a ubiquitous concern. “Instead of it being held in an expert’s mind where the manufacturing gets done, now the intellectual property is held in a file, which means if anybody gets the digital file, if it gets out, somebody hacks into your system…you lose the intellectual property.”

The third and final risk Klososky highlights is, in his opinion, the “most dangerous risk of all”: product performance.

Dubbed the ‘fourth industrial revolution,’ additive manufacturing does indeed have the potential to shake up industrial production as we know it, even if it hasn’t quite reached peak adoption just yet. Because digital files can be instantly downloaded and sent around the world, the costly practice of outsourcing production and having parts shipping back and forth across continents could be eliminated.

“You’re talking about changing industries when you can manufacturing in that way. You just contract it out and manufacture anywhere in the world,” he said.

However, where there is innovation, there is risk. First and foremost, he addresses the growing variety of new 3D printing materials, or substrates, available on the market today, from metals (aluminium, gold, platinum) to plastics and wax. “Every one of these introduces structural failure risk. When you make these parts or these structures, if the substrate is flawed in anyway, if the substrate doesn’t melt the proper way, you can get structural failure,” he explained.

The pressing question that emerges from this is, who is responsible for this failure? Is it the 3D printing manufacturer, the materials manufacturer, or a third party?

Klososky may not have the answers, however his goal is to call for further exploration and education in this area: “We probably haven’t even begun to understand the amount of risk we’re going to have when we switch from traditional manufacturing techniques, which we understood because they were in the past, to these newer manufacturing techniques.”

Risk professionals are tasked with assessing the potential risks and rewards of new technologies in order to help their clients adapt and adjust their investments, protecting their customers, employees, and business along the way. A thorough understanding of the technology’s past, present, and potential future is the only way to do so.

In the end, perhaps all we can do is remain optimistic, yet pragmatic: "Technology is such a fascinating world, but like I said, every time there is something new we have to pioneer, we increase the risk.”

See Klososky speak on 3D printing in the video below. For a related perspective, read this European law firm’s take on the legal aspects of 3D printing.



Posted in 3D Printing Technology



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