ISSUE 139

BOARD PERSPECTIVES:

Risk Oversight

QUANTUM COMPUTING: WHY THE
BOARD SHOULD CARE
Quantum computing offers companies a powerful value proposition for solving complex
problems in ways not attainable today. Those unprepared to harness quantum’s
capabilities risk being left in the dust by competitors who are.
There is a growing interest across the worldin the feasibility of quantum computing
and when it will finally become a reality inbusiness. And that’s for good reason. Quantum
would enable problem-solving capabilities
to address simulations and complicatedoptimization questions involving a formidable
number of variables and potential outcomesat amazing speeds not attainable withconventional computers. For example, it could:• Revolutionize all areas of logistics
in moving products, create complex
engineering designs, and improve
artificial intelligence (AI) applications in
consumer products and manufacturing.

• Predict materials behavior in different
conditions to support development of
cost-effective material compositions

with improved or desired properties
to meet performance specifications inchemicals and manufacturing.

• Improve sensor development, optimize
network designs and energy distribution,and maximize oil well output in energy
and utilities.

• Rebalance documented portfolio gains,
optimize trading trajectory, elevate credit
risk analysis, and integrate AI for near-realtime fraud detection in financial services.

• Optimize search data for better AI
diagnostic aids (from faint marks in MRIs
to overall symptom comparisons), modeland simulate molecular interactions toaccelerate drug discovery, and analyze
genetics to facilitate the development ofpersonalized treatments in healthcare andlife sciences.

• Enable better, faster search capabilities, boost
AI and machine learning capabilities, optimize
training data, create new algorithms, optimize
advertising and marketing analysis, and verify
and validate software in technology, media andtelecommunications.
In summary, quantum-inspired algorithms could
bring innovative solutions and approaches to
product development, reduce time to market,
optimize customer delivery, and speed up datatransfers. There isn’t an industry that wouldn’t besignificantly affected once one or two competitors
harness quantum’s disruptive computing power.
The remaining players in the sector will be left
scrambling to catch up.
Importantly, general purpose quantum
computers could significantly weaken, even kill,current cryptography systems used to hide andsecure data so that only certain people can view it.
In other words, a quantum computer of sufficient
power will instantly render today’s security
systems obsolete and break the encryption ofsensitive data protected by today’s strongest
security. When this performance threshold is met,an organization’s data, intellectual property (trade
secrets, proprietary systems, formulas, patents,
customer information and data) will be at risk. Any
information shared on public channels now or in
the future will be vulnerable.
Clearly, this would have huge implications
for industries such as financial services andhealthcare that have significant regulatory
requirements for data privacy and security.
Quantum’s business, legal and ethical impacts
can compromise the security of financial andbanking transactions, the confidentiality of
medical data and healthcare records, safe
storage of personal data in the cloud, and access
restrictions to confidential corporate networks.
And the impact wouldn’t be limited to the1private sector, as government and militarycommunications would also be compromised.
While this may sound like science fiction, both theopportunities and threats posed by quantum arereal. Companies need to start laying the foundation
for quantum so that they don’t get left behind. The
good news is that practical quantum advantage in
specific applications will come years before thethreat to cryptography. If quantum applications
were to begin in, say, three years, there would be arush for the talent and resources needed to harness
its power. The early movers across the globe may
end up with the top players.
So, for boards, there are three relevant questions.

What is quantum computing?
Quantum computers are machines that use theproperties of quantum physics to store data andperform computations. The capabilities they
provide will one day significantly outperform eventhe most powerful supercomputers for solving
especially complex problems. This future inflection
point, or “quantum supremacy,” could come assoon as 2023, taking current road maps by IBMor IonQ into account. What kind of supremacy?
Google’s Sycamore computer completed a complexcomputation in 200 seconds that the company
believed the most powerful supercomputers
would take about 10,000 years to complete.1 Whileother researchers have challenged this result
and the practicality of the calculation itself, thisdemonstration offers a context for understanding
just how powerful quantum can be.
Conventional computers store data using bits,
which have a value of either zero or one, whereas
quantum computing uses “qubits” (short forquantum bits), which can represent both zero andone simultaneously. Think of it this way: a coin isbinary, heads or tails — the “value” is either one
or the other. But when a coin is flipped, it’s bothheads and tails, as well as all combinations of the“Google’s Quantum Computer Just Aced an ‘Impossible’ Test,” by Tim Childers, Live Science, October 24, 2019:www.livescience.com/google-hits-quantum-supremacy.html.

protiviti.com

Board Perspectives: Risk Oversight · 2

two. This fundamental ability of a quantum system
to exist in more than one state at any time is calledsuperposition. Instead of coins, quantum abilities
use atoms to fuel this new way of computing.
Some believe that Moore’s Law — the ability
to double the number of transistors in a dense
integrated circuit about every two years — has
hit the wall of physical limitations. So, whileconventional computers will have a role to playin the foreseeable future, there are complex
problems they’ll never be able to solve. Algorithms
written to take advantage of qubits can perform
certain types of computations much more quickly
and with much less energy than conventional
computers. Herein lies the promise of quantum.

When does quantum computing
become real in our industry?
No one knows for sure how to answer this question.
True, there is hype that some characterize as
overreach. But as time passes, the forecast forpractical use cases compresses. Certain things areclear: Technology companies are investing heavily
in quantum capabilities, and when quantum iscommercially feasible, it will be a game-changer
for how business is done. Companies in various
industries are already experimenting with thetechnology to address logistics and investingin startups focused on the hardware, software,algorithms, security and analytics that will makequantum computing a reality.2
Therefore, as companies assess the “when”
question and keep a watchful eye on market
developments, they should also prepare for thisbrave new computing world. Numerous cloudenvironments already exist that allow companies
to access quantum simulators and real quantum
computers. Microsoft Azure Quantum, Amazon
Braket and IBM Quantum Experience are a few
examples, each one featuring rich development
interfaces and tools.

2

Many companies think that when a competitor
builds a better mousetrap, they can replicate it in a
relatively short period. But that won’t be possible
with quantum since computing applications will beproprietary. It takes time and talent to prepare for aquantum world. The market experienced something
like this four years ago with machine learning
applications. However, quantum will pose aneven steeper learning curve, requiring substantial
emphasis on acquiring and skilling the talentneeded to leverage this game-changing capability.

What do we do now?
There are several steps companies shouldtake today:• Select a quantum champion. Obtain executive
sponsorship. Designate someone responsible
for following industry progress on quantum
capabilities and for leading preparations for theeventual quantum world, possibly within theCIO organization.

• Conduct a quantum–readiness assessment.
Ask questions such as: How much do we know
about quantum computing? How will it likely
be applied in our industry? What do we needto remain relevant and competitive as thisadvanced computing environment evolves?
For example, take talent. Quantum requires
significant training on new engineering andprogramming techniques to envision theproblems to be solved and the coding required
to address those problems using quantum
algorithms and resources. There will be ashortage of skills required to take advantage ofquantum computing for companies that wait toolong to begin developing and acquiring them.

• Identify quantum computing use cases

and assess their value to your organization.
The quantum champion should work withall business units to determine importantbusiness and technology issues the company“Investors Tell Us Why They’re Pouring Millions Into Quantum Computing,” by Biz Carson, Protocol, May 4, 2020: www.protocol.com/manuals/quantum-computing/vc-investments-bullish-quantum-computing-coronavirus.

protiviti.com

Board Perspectives: Risk Oversight · 3

is unable to address today but may be able
to address using quantum. The various data
analysis, simulation and optimization issues
should be ranked according to priority.

• Uncover potential risks to encryption andother aspects of company security. The
threats quantum presents to conventional
cryptography are formidable. When quantum
computing becomes mature, it will also
quickly make many of today’s encryption
methods obsolete and easy to crack. On the
defensive security side, companies will findthemselves in a new arms race to stay aheadof quantum decryption capabilities. In fact,
the initial focus of quantum in business mayvery well be to safeguard data. That’s why it’stime to start thinking about cryptographic
agility and assessing necessary changes.
The National Institute of Standards andTechnology (NIST) is currently evaluating newalgorithms to replace those at risk.

• Chart a quantum course and multiyear road

map. Based on the identified priority use casesand encryption and security exposure, lay out aroad map for developing quantum capabilities.

• Start your journey and reassess the roadmap every six to 12 months. Update theroad map based on new quantum–computing
discoveries and developments, the emergenceof new use cases, and relevant changes in theindustry and business environment.

In summary, positioning a company for the quantum
revolution is all about being watchful, prepared andflexible. Boards should advise their companies tostart planning sooner rather than later to avoid
resource challenges that could leave them missingout on the benefits and necessary protections ofquantum. Understanding the opportunity andissues and preparing to seize and solve them when
the inevitable inflection point arrives could yield
dramatic business advantage — and disruption.

Questions for Boards
Following are some suggested questions that boards of directors may consider, based on theopportunities and risks inherent in the company’s operations:• Do we understand what quantum computing is? Do we have a point of view as to how quantum
will likely disrupt our industry? Are we aware of competitors focusing on how they will harness
quantum? Should we sit and watch or get into the game?

• If we don’t prepare for the advantages of quantum and our competitors do, will we be at acompetitive disadvantage once it is deployed in the industry? Conversely, how might we leveragequantum computing to gain a competitive advantage in the future?

• Are there critical processes and technologies we have today that rely on encryption that quantum
will make obsolete? Are there business challenges we’re unable to solve today that quantum
computing will be well-suited to solve in the future? If we don’t know, should we find out?

• Are we positioned to tap into the available pool of quantum computing talent soon? Over thenext three to five years?

• Is there effective governance over where and how we invest in quantum computing? For
example, in leveraging quantum, what criteria do we use when choosing between financial
optimization and, say, the simulation of chemical reactions through trial and error for purposesof developing lifesaving medicine?

protiviti.com

Board Perspectives: Risk Oversight · 4How Protiviti Can Help
Our quantum computing services help clients
prepare today to manage risks and identify
opportunities to take advantage of this powerfulcapability. While practical applications of quantum
computing are still a few years away, now is
the time to prepare to ensure your business is

positioned to harness the power of quantum
computing rather than become a casualty of
the revolution. We help organizations in allindustries identify real use cases, determine thevalue, assess their risk and take action to become
quantum-ready.

Audit Committee Self-Assessment Questions
In these dynamic times, it is best practice for boards and their standing committees and individual directors to self-assess theirperformance periodically and formulate actionable plans to improve board performance based on the results of that process.
To that end, audit committees should consider the illustrative questions we have made available at www.protiviti.com/US-en/
insights/bulletin-assessment-questions-audit-committees. These comprehensive questions consider the committee’s composition,charter, agenda and focus, and may be customized to fit the committee’s assessment objectives in light of current challenges thecompany is facing.

Protiviti (www.protiviti.com) is a global consulting firm that delivers deep expertise, objective insights, a tailored approach and unparalleled collaboration to help leadersconfidently face the future. Protiviti and our independent and locally owned Member Firms provide clients with consulting and managed solutions in finance, technology,operations, data, analytics, governance, risk and internal audit through our network of more than 85 offices in over 25 countries.
Named to the 2021 Fortune 100 Best Companies to Work For® list, Protiviti has served more than 60 percent of Fortune 1000 and 35 percent of Fortune Global 500
companies. The firm also works with smaller, growing companies, including those looking to go public, as well as with government agencies. Protiviti is a wholly owned
subsidiary of Robert Half (NYSE: RHI). Founded in 1948, Robert Half is a member of the S&P 500 index.
Protiviti partners with the National Association of Corporate Directors (NACD) to publish articles of interest to boardroom executives related to effective oremerging practices on the many aspects of risk oversight. As of January 2013, NACD has been publishing online contributed articles from Protiviti, with the content
featured on https://blog.nacdonline.org/authors/42/. Twice per year, the six most recent issues of Board Perspectives: Risk Oversight are consolidated into a printed
booklet that is co-branded with NACD. Protiviti also posts these articles at protiviti.com.

© 2021 Protiviti Inc. An Equal Opportunity Employer M/F/Disability/Veterans. PRO-0521
Protiviti is not licensed or registered as a public accounting firm and does not issue opinions
on financial statements or offer attestation services.