Risk Management in Blockchain: Dissertation Project, October 2018

This dissertation, submitted in October 2018 to The British University in Dubai for an MSc in Project Management, investigates risk management within blockchain technology. The research aims to identify the concepts of blockchain to help in easier identification of the different risks and issues associated with blockchain technology. The dissertation includes an extensive literature review, data collection, and analysis to provide a comprehensive understanding of blockchain architecture, its benefits, challenges, and major risks. The methodology section outlines the research onion, philosophy, approach, design, and data analysis methods. The data analysis chapter presents findings from a survey, testing research hypotheses and analyzing the effectiveness of encryption, digital signatures, cryptography, and efficient key management as risk mitigation strategies. The discussion chapter delves into the effectiveness of various risk mitigation approaches and the conclusion offers recommendations for further research.

Running head: BLOCKCHAIN AND RISK MANAGEMENT
Risk management in blockchain
إدارة المخاطر في المعامالت الرقمية (البلوك تشين )
By
xxxx
A dissertation submitted in fulfilment of the requirements for the
degree of
MSc PROJECT MANAGEMENT
At The British University in Dubai
xxxxx
October 2018

BLOCKCHAIN AND RISK MANAGEMENT
DECLARATION
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I understand that The British University in Dubai may make a digital copy available in the
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withhold or to restrict access to my thesis for a period which shall not normally exceed four
calendar years from the congregation at which the degree is conferred, the length of the period to
be specified in the application, together with the precise reasons for making that application.
Sultan Al Houli
_______________________
Signature of the student

BLOCKCHAIN AND RISK MANAGEMENT
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BLOCKCHAIN AND RISK MANAGEMENT
Abstract
The aim of the research is to identify the different concepts of blockchain which helps in easier
identification of the different risks and the issues associated with blockchain technology.
Blockchain is an emerging concept and therefore, it is necessary to identify the different risks
and the issues associated with the blockhain technology. The research involves an extensive
literature review that aims in thorough understanding of the different concepts and the structure
of blockchain architecture. The data collection and data analysis is an important chapter of this
research project since it aims in providing an accurate knowledge about the effectiveness of the
different risk mitigation approaches that is identified in the literature review section. The
research objective is to identify the different risks and the issues associated with a blockchain
technology, its system and applications along with the recommendation of the strategy that will
help in easier management of the risk and different issues associated with the use of blockchain.
It is essential to identify the different risks associated with the use of blockchain and its
application and the use and adoption of the blockchain technology is expected to increase in
future

BLOCKCHAIN AND RISK MANAGEMENT
نبذة مختصرة
الهدف من البحث هو التعرف على المفاهيم المختلفة لتقنيةالبلوكتشين مما يساعد في التعرف على
المخاطر المختلفة والمسائل المرتبطة بتكنولوجيا البلوك تشين. البلوك شينهو مفهوم ناشئ وبالتالي ،
.اختار الباحث نهجًا أساسيًا فمن الضروري تحديد المخاطر المختلفة والقضايا المرتبطة بتقنية البلوك تشين
.لجمع البياناتاألولية لهذه الدراسة يتضمن البحث مراجعة شاملة للدراسات السابقة والتي تهدف إلى فهم
.شامل للمفاهيم المختلفة وهيكل بنية البلوك تشين يعتبر قسم مراجعة الدراسات السابقة جزءًا مهمًا من
.هذا المشروع البحثي حيث يهدف إلى تحليل المفاهيم المختلفة والقضايا المرتبطة بتكنولوجيا البلوك تشين
يتبعه قسم مراجعة الدراسات السابقة في البحث ، يهدف البحث إلى جمع البيانات األولية وتحليل البيانات
.إحصائيا ًيمثل جمع البيانات وتحليل البيانات فصال ًهامًا من هذا المشروع البحثي ، حيث يهدف إلى توفير
معرفة دقيقة حول فعالية أساليب تخفيف المخاطر المختلفة التي تم تحديدها في قسم مراجعة الدراسات
.ًالسابقة الهدف من البحث هو تحديد المخاطر المختلفة والقضايا المرتبطة بتكنولوجيا البلوك تشين جنبا
إلى جنب مع توصية االستراتيجية التي ستساعد في سهولة إدارة المخاطر والقضايا المختلفة المرتبطة
.باستخدام البلوك تشين من المهم أن نفهم الحاجة إلى إدارة مختلف القضايا والمخاطر المرتبطة بالبلوك
.تشين ضخمة ألنها تستخدم من قبل عدد من منظمات األعمال في اآلونة األخيرة هناك عدد من التطبيقات
لتكنولوجيا البلوك تشينالتي تشملالعملة الرقمية ( بتكوين)، والعقود الذكية ،ايثريوم.وهلم جرا من
الضروري تحديد المخاطر المختلفة المرتبطة باستخدام البلوك تشين وتطبيقاته ومن المتوقع أن يزيد
.استخدام وتبني تقنية البلوك تشين في المستقبل وقد تم اتباع نهج منظم للبحث للتوصل إلى أسئلة البحث
المحددة واإلجابة عليها

BLOCKCHAIN AND RISK MANAGEMENT
Acknowledgement
The research study has considerably helped me in improving my knowledge and ability. This has
been possible as the research project have helped me in facing the challenges and conquering
them. It would not have been possible for me to conduct the research without the significant
direction of my professors, companions and every one of who have added to this advancing
knowledge. I want to thank my supervisor Dr Maria Papadaki for helping me in my research
work as well as for giving their full support during the research study. I would also thank all the
participants within this study for giving their time and helping me out with the project. From the
support of people, I am inspired to work on further researches in this subject area. Finally, thank
you to my family members who always encouraged me. Thank You.

BLOCKCHAIN AND RISK MANAGEMENT
CONTENTS
CHAPTER 1: INTRODUCTION........................................................................................1
1.1. BACKGROUND OF THE RESEARCH STUDY...................................................1
1.2. AIMS OF THE STUDY...........................................................................................4
1.3. OBJECTIVES OF THE STUDY..............................................................................5
1.4. RESEARCH QUESTIONS......................................................................................5
1.5. RATIONALE OF THE STUDY..............................................................................6
1.5. SCOPE OF THE RESEARCH.................................................................................7
CHAPTER 2: LITERATURE REVIEW...........................................................................10
2.1. INTRODUCTION..................................................................................................10
2.2. THE CONCEPT OF BLOCKCHAIN....................................................................10
2.3. HISTORY OF BLOCKCHAIN TECHNOLOGY.................................................13
2.4. WORKING PRINCIPLE OF BLOCKCHAIN......................................................14
2.5. BENEFITS OF BLOCKCHAIN............................................................................16
2.6. BLOCKCHAIN ARCHITECTURE.......................................................................18
2.7. KEY CHARACTERISTICS OF BLOCKCHAIN.................................................19
2.8. CHALLENGES WITH BLOCKCHAIN...............................................................20
2.9. MAJOR RISKS WITH BLOCKCHAIN................................................................22
2.10. BLOCKCHAIN AND RISK MANAGEMENT..................................................29
2.10.1. RISK MANAGEMENT................................................................................30
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2.11. RISK MANAGEMENT IN BLOCKCHAIN.......................................................32
2.12. CHAPTER SUMMARY......................................................................................37
CHAPTER 3: METHODOLOGY.....................................................................................40
3.1. INTRODUCTION..................................................................................................40
3.2. RESEARCH ONION..............................................................................................40
3.2.1. FIRST LAYER OF RESEARCH ONION......................................................42
3.2.2. SECOND LAYER OF RESEARCH ONION.................................................43
3.2.3. THIRD LAYER OF RESEARCH ONION.....................................................44
3.2.4. FOURTH LAYER OF RESEARCH ONION.................................................44
3.2.5. FIFTH LAYER OF RESEARCH ONION......................................................45
3.2.6. SIXTH LAYER OF RESEARCH ONION.....................................................45
3.3. RESEARCH PHILOSOPHY..................................................................................46
3.3.1. DEFENSE OF SELECTING POSITIVISM PHILOSOPHY..........................47
3.4. RESEARCH APPROACH.....................................................................................47
3.4.1. DEFENSE FOR SELECTING DEDUCTIVE RESEARCH APPROACH....48
3.5. RESEARCH DESIGN............................................................................................48
3.5.1. DEFENSE FOR SELECTING DESCRIPTIVE RESEARCH DESIGN........49
3.6. DATA COLLECTION METHODOLOGY...........................................................50
3.7. DATA ANALYSIS METHODOLOGY................................................................51
3.8. POPULATION AND SAMPLE.............................................................................51
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3.9. ETHICAL CONSIDERATIONS............................................................................52
3.10. CONCEPTUAL FRAMEWORK.........................................................................53
3.11. RESEARCH HYPOTHESIS................................................................................54
3.12. CHAPTER SUMMARY......................................................................................54
CHAPTER 4: DATA ANALYSIS....................................................................................55
4.1. INTRODUCTION..................................................................................................55
4.2. ANALYSIS OF THE COLLECTED DATA.........................................................55
4.2.1. DEMOGRAPHIC DATA................................................................................56
4.2.2. DATA ANALYSIS OF THE DATA COLLECTED FROM SURVEY.........59
4.3. TEST OF RESEARCH HYPOTHESIS.................................................................81
4.4. CHAPTER SUMMARY........................................................................................82
CHAPTER 5: DISCUSSION............................................................................................84
5.1. INTRODUCTION..................................................................................................84
5.2. EFFECTIVENESS OF ENCRYPTION.................................................................85
5.3. EFFECTIVENESS OF DIGITAL SIGNATURE..................................................88
5.4. EFFECTIVENESS OF CRYPTOGRAPHY..........................................................90
5.5. EFFECTIVENESS OF EFFICIENT KEY MANAGEMENT...............................92
5.6. MITIGATING THE DATA VULNERABILITY RISKS......................................94
5.7. CHAPTER SUMMARY........................................................................................95
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BLOCKCHAIN AND RISK MANAGEMENT
CHAPTER 6: CONCLUSION AND RECOMMENDATION FOR FURTHER
RESEARCH..................................................................................................................................97
6.1. LINKING WITH THE OBJECTIVE.....................................................................98
6.2. RESEARCH LIMITATION.................................................................................101
6.3. RECOMMENDATIONS......................................................................................102
6.4. FUTURE RESEARCH.........................................................................................103
REFERENCES................................................................................................................105
APPENDIX......................................................................................................................114
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BLOCKCHAIN AND RISK MANAGEMENT
TABLE OF TABLES
Table 1: Demographic Data of Field of Work of the Respondents62
Table 2: Demographic Data about the experience of the respondents in their field of work64
Table 3: Representing the opinion about encryption being a risk mitigation approach65
Table 4: Representing the opinion about enforcing digital signature a Risk mitigation approach67
Table 5: Representing the response about the choice of a trusted vendor68
Table 6: Representing the opinion about Cryptography being useful to mitigate the operational and IT Risks69
Table 7: Representing the opinion about Cryptography being useful to mitigate the transactional privacy Risk71
Table 8: Representing the opinion about incident response plan being useful to mitigate business continuity
Risk72
Table 9: Representing the opinion about resource sharing plan being useful to mitigate the risk of untested
growth73
Table 10: Representing the opinion about standard control being useful to mitigate the risk of decentralization74
Table 11: Representing the opinion about data governance being useful in access control76
Table 12: Representing the opinion about efficient key management being useful in mitigating security Risk77
Table 13: Representing the response about the use of antivirus78
Table 14: Representing the opinion about trusted vendor being useful in mitigating supplier risk79
Table 15: Representing the opinion about cryptographic protocols being useful in mitigating consensus protocol
risk80
Table 16: Representing the rsponse about data quality validation82
Table 17: Response about the use of Private blockchain83
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BLOCKCHAIN AND RISK MANAGEMENT
TABLE OF FIGURES
Figure 1: Representing blockchain architecture27
Figure 2: Representing the Risks33
Figure 3: Representing the steps of Risk Management38
Figure 4: Representing the structure of a research onion48
Figure 5: Representing the conceptual framework60
Figure 6: Demographic Data of Field of Work of the Respondents63
Figure 7: Demographic Data about the experience of the respondents in their field of work64
Figure 8: Representing the opinion about encryption being a risk mitigation65
Figure 9: Representing the opinion about enforcing digital signature a Risk mitigation approach67
Figure 10: Representing the response about the choice of a trusted vendor68
Figure 11: Representing the opinion about Cryptography being useful to mitigate the operational and IT Risk70
Figure 12: Representing the opinion about Cryptography being useful to mitigate the transactional privacy
Risk71
Figure 13: Representing the opinion about incident response plan being useful to mitigate business continuity
Risk72
Figure 14: Representing the opinion about resource sharing plan being useful to mitigate the risk of untested
growth73
Figure 15: Representing the opinion about standard control being useful to mitigate the risk of
decentralization75
Figure 16: Representing the opinion about data governance being useful in access control76
Figure 17: Representing the opinion about efficient key management being useful in mitigating security Risk77
Figure 18: Representing the response about the use of antivirus78
Figure 19: Representing the opinion about trusted vendor being useful in mitigating supplier risk79
Figure 20: Representing the opinion about cryptographic protocols being useful in mitigating consensus protocol
risk81
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