The fourth industrial revolution – Understanding the opportunities and threats With the speed of change that the new wave of technology represents we will consider the changing impact on business.

1. Understanding the opportunities and threats
The fourth industrial revolution
Thursday 15 June 2017
Charlotte Walker-Osborn
Technology & Outsourcing Partner and Head
of Telecoms, Media & Technology Sector
(EMEA and Asia-Pac)
Liz Fitzsimons
Partner, Privacy & Cyber Security
James Burnie
Associate, Financial Institutions

2. With the speed of change
that the new wave of
technology represents we
will consider the changing
impact on business

3. Eversheds Sutherland | 11 July 2017 |
Agenda for today’s webinar
─ Overview of revolutionary development
─ Robotics, AI and automation
─ Blockchain
─ Additive manufacturing
─ Cyber and data security
─ Conclusions
• Underlying themes we will touch upon
• Opportunities
• Potential threats
• Horizon scanning
The fourth industrial revolution – understanding the opportunities and threats

4. Brief overview of
revolutionary development

5. Eversheds Sutherland | 11 July 2017 | The fourth industrial revolution – understanding the opportunities and threats
Smart
metering
Connected
Autonomous
vehicles
(CAV)
Big Data
Internet of
Things
Additive
Manufacturi
ng
Robotics
Individual
genome
mapping
Personalised
medications
and
treatments
Automation Virtual
reality
Telematics
Cloud
storage
Blockchain P2P

6. Eversheds Sutherland | 11 July 2017 | The fourth industrial revolution – understanding the opportunities and threats
source: Cap Gemini / David Hamman

7. Eversheds Sutherland | 11 July 2017 | The fourth industrial revolution – understanding the opportunities and threats

8. Eversheds Sutherland | 11 July 2017 | The fourth industrial revolution – understanding the opportunities and threats

9. Eversheds Sutherland | 11 July 2017 |
Key Opportunities
Revolutionary development
─ Growth & sustainability
• Improved ROI
• New products and services
• Improves profitability and efficiency
• New employment opportunities
─ Big data
• Improved understanding
• Greater insight of needs, likes, dislikes and trends
─ Tailored to need
• Personalised
• Saves time and costs
• Rewards loyalty
• Smart incentivisation
─ Potential safety benefits
The fourth industrial revolution – understanding the opportunities and threats

10. Eversheds Sutherland | 11 July 2017 |
Potential Threats
Revolutionary development
─ Employment and job security
─ Brand and reputation
─ Competition concern
─ Inadequate regulation
─ The surveillance debate
─ Cybersecurity
The fourth industrial revolution – understanding the opportunities and threats
source: Hewlett Packard Enterprises
The Guardian. BBC News.

11. Connected car (example)

12. Factoring in legal considerations to the technology build
within a connected environment

13. Focusing in on some of the hot areas and their related
considerations

14. Robotics, AI and
automation

15. • Legislative position uncertain in many countries
• Watch for new laws coming in
• IP ownership / ownership of outputs
• Product liability / liability and responsibility positions
• Employment considerations
• Data protection / cyber
Robotics, AI and automation – key legal points to think about

16. Eversheds Sutherland | 11 July 2017 |
Blockchain

17. The third party intermediary system
What is blockchain / DLT?
The DLT system
Seller
Intermediary
Buyer
Nod
e
Nod
e
Nod
e
Nod
e
Nod
e
Nod
e
Nod
e
Nod
e
Nod
e
Nod
e
Buye
r
Selle
r

18. Eversheds Sutherland | 11 July 2017 |
• What is a smart contract?
IF [Entity #564445] sends [10
widgets] that [meet at least standard
XYZ] THEN release [[£1.00] for each of
those widgets] to User/Account
#590235234
• The risks of using smart contracts:
• Perverse outcomes
• The difficulty of coding “reasonableness”
• The increasing importance of smart contract technology
Smart contracts

19. Eversheds Sutherland | 11 July 2017 |
The DAO attack
ETH
Nod
e
Nod
e
Nod
e
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e
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e
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e
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e
Nod
e
Member
Idea
MemberMember

20. Eversheds Sutherland | 11 July 2017 |
─ The actual need for blockchain
─ Governance:
• permissioned vs permissionless
• tiered authority
• correcting mistakes vs immutability
─ Resource costs
─ Privacy
─ Legal:
• position in the legal framework /
sandboxes
• conflicts of law
• AML
• insolvency
─ Interoperability
─ Competition
Issues to consider when using a blockchain solution

21. Additive
Manufacturing

22. What is Additive Manufacturing?
11/07/2017 22
 Additive Manufacturing (or 3D printing) is a process of making three dimensional solid objects from a digital file
 The digital file is created via 3D CAD software by a designer or can be generated via a 3D Scanner. The files are
saved as STL files
 STL files describe only the surface geometry of a three-dimensional object without any representation of colour,
texture or other common CAD model attributes
 The STL format approximates the surfaces of a solid model with a number of small triangles

23. 11/07/2017 23
What is Additive Manufacturing
 The STL file is then sliced into tiny layers, hence the term Additive Layer Manufacturing, via the Additive
Manufacturing Machine software
 The data is then sent to the Additive Manufacturing Machine (3D Printer) where the final part is produced
CAD Data Save as STL Slice File Print Process

24. 24
AM Industries – Who is using AM?
24
 Industrial/Business Machines is the leading Sector which Includes office equipment such as computers and
industrial automation equipment (robots)
 AM is being used particularly in the Consumer Products and Automotive Industry to accelerate product
development enabling rapid design iterations and optimization
4.3% growth since
2013
Source: Wohlers Report 2016

25. Eversheds Sutherland | 11 July 2017 |
Key considerations
Additive manufacturing
Version: [###] Classification: Internal Owner: [Insert name]

26. Cyber and data security
A deeper look

27. • Preventative measures to tackle cyber security incidents:
• invest in security and scanning tools
• checking traffic in and out of networks
• checking use of IT equipment and access to the internet – although note rules controlling interception
of communications and monitoring and privacy and data protection rules
• training - staff recognise security breaches and know how to react to them, who to report to, how
quickly and with what details
• response team must be able to cover an incident 24/7, 365 days per year and may need international
support
• Practically, appropriate and effective monitoring can help avoid and minimise cybersecurity risks
• Failing to identify and deal with threats shown to increase sanctions imposed by regulators following resultant
breach
• Monitoring can provide essential intelligence about compromised security, when and where and how it
happened
• allow a gap to be identified at a stage where the relevant incident and compromised data is minimal
• allow adjustments to be made to prevent further and more serious breaches taking place
• understand what data has been compromised or extracted, how many individuals or systems are
affected and the severity of the incident.
• First priority - isolate the breach and stop it to prevent further intrusion, data loss or damage. Then to try to
recover any data lost and/or to lock it down.
• Mandatory and voluntary reporting, as well as communication and PR strategies.
• Outsourcing, e.g. to cloud providers, may enhance security, bringing state of the art security within affordable
reach
• also carries inherent security risks
Data and cyber security

28. Eversheds Sutherland | 11 July 2017 |
• Smart technology being developed, plugged into systems and implemented at a rapid rate –
• not always allowed for the full security implications to be considered or addressed
• security considerations not necessarily a high priority since businesses have assumed that
details obtained are not “personal” and have minimal if any privacy impact
• regulators disagree and believe that the data collected by a great deal of smart technology has
privacy implications and may often involve the collection and use of personal data, such as from
metadata about usage and/or location
• Adding components, devices and interfaces to systems necessarily increases the potential routes
into systems and increases potential security vulnerabilities.
• Security – especially of personal data and other higher risk data – should be considered from the
outset and at every stage of the design and development of technological innovation.
• Should determine whether the collection and use of data envisaged is lawful, necessary and
proportionate to need.
• Amount and sensitivity of data involved should be assessed: has this been minimised and why is
it essential? Could it be encrypted?
• The potential impact on individuals from the proposed technology should be considered and
mitigated.
• Risk of attack and exploitation should be considered, addressed and engineered out completely
or as much as possible and appropriate.
• Privacy by design and default is a mandatory GDPR obligation from May 2018 but buyers of systems
and products will be looking for comfort on compliance now if systems and products are to be used
post May 2018.
• Businesses can address these issues by impact assessments throughout the design process.
Data and cyber security
The fourth industrial revolution – understanding the opportunities and threats

29. Eversheds Sutherland | 11 July 2017 |
Threats
• Lack of ability to make
mistakes, learn and grow
• Bad publicity
• Potential litigation
• Loss of trust
• Cost of security
• Shareholder confidence
Opportunities
• Comprehensive security
system saves time and
worry
• Good safety record boosts
reputation
Data and cyber security
The fourth industrial revolution – understanding the opportunities and threats
Threats and opportunities

30. An Overview of Data Protection and Privacy
Threats and opportunities

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Overview of Issues
Data Protection and Privacy
─ Privacy impact
─ Lack of understanding and knowledge
─ Lack of choice and control
─ Loss of opportunity
─ Discriminatory access, terms and pricing
─ Lack of safe space
─ Security threats, fraud and identity theft
─ Enhanced regulatory concern
─ Growing public awareness
─ Intense media interest
─ Rebalancing of power from organisations to individuals
The fourth industrial revolution – understanding the opportunities and threats

32. Eversheds Sutherland | 11 July 2017 |
What you need to know
Data Protection and Privacy
─ Is it data or personal data?
─ Which laws apply?
• Extra territorial reach
─ Is its use regulated?
─ Which regime applies?
─ Have you considered compliance?
• Speed of change
• Product development cycle
─ How can you comply?
─ What are the risks if you don’t?
• Financial
• Business critical
• Brand & reputation
• Personal
The fourth industrial revolution – understanding the opportunities and threats

33. Eversheds Sutherland | 11 July 2017 |
The increasing controls on use of data
Data protection and Privacy
─ New and enhanced laws
• GDPR
• Japan
• New York and Illinois
• Digital Single Market
• ePrivacy regime
• Future proofing
• Technology neutral
─ More data becomes personal
• Individual identifiers
• Re-identification
• Pseudonymisation
─ Greater thought & explanation needed
─ Additional individual controls and rights
─ Increased regulator and individual appetite to challenge
The fourth industrial revolution – understanding the opportunities and threats

34. Eversheds Sutherland | 11 July 2017 |
What you need to do
Data Protection and Privacy
─ Identify new
• Systems & processes
• Technology
• Products
• Data collection
• Uses of data
• Websites & apps
─ Think data protection and privacy first
─ Privacy by design and default
─ Minimised access
─ Collaboration and partnering
─ Privacy impact assessments
─ Privacy governance and data protection officer
─ Meeting individual rights
─ Regulator consultation and approval
The fourth industrial revolution – understanding the opportunities and threats

35. • Necessity & proportionality
• Data minimisation
• Lawful basis & purpose limitation
• Maintenance of accurate, complete and up to date data
• Retention and storage limitation
• Security, integrity and confidentiality
• Accountability
• Danger areas
• Profiling and automated decision making
• Monitoring & tracking
• Surveillance
• Location and mobility data
• Unexpected use, sharing and export
• Special personal data
• Criminal offence related data
• Targeted / behavioural use
• Permanent impact
Helpful hints
Data Protection and Privacy

36. Eversheds Sutherland | 11 July 2017 |
Conclusions / questions?
The fourth industrial revolution – understanding the opportunities and threats

37. Thank you

38. eversheds-sutherland.com
This information pack is intended as a guide only. Whilst the information it contains
is believed to be correct, it is not a substitute for appropriate legal advice.
Eversheds Sutherland (International) LLP can take no responsibility for actions
taken based on the information contained in this pack.
© Eversheds Sutherland 2017. All rights reserved.
Charlotte Walker-Osborn
Technology & Outsourcing
Partner, Head of Telecoms, Media
& Technology Sector
Tel: +44 121 232 1220
Mob: +44 779 907 5756
E-mail: charlottewalker-
osborn@eversheds-sutherland.com
James Burnie
Associate, Financial Institutions
Liz Fitzsimons
Partner, Privacy & Cyber Security
Tel: +44 20 7919 0879
E-mail: jamesburnie@eversheds-
sutherland.com
Tel: +44 1223 44 3808
Mob: +44 774 091 8238
E-mail: lizfitzsimons@eversheds-
sutherland.com
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