Regulatory fines and penalties arising from data protection breaches is the biggest issue on the minds of executives in the technology, media and telecommunications (TMT) sector, according to research and a ranking released by Willis Towers Watson
According to the TMT Risk Index 2016, just released by the global advisory and broking group, the top three risks are: data protection fines and penalties; intellectual property and patent infringement; and competition and anti-trust law scrutiny.
In addition, data protection fines and penalties, and intellectual property and patent infringement were ranked as the top two risks facing the industry in the coming 12 months.
“While a fine from a data breach is perceived to be a top priority across the global TMT industry, the top three risks indicate that regulatory change and legal risk are foremost on senior management’s risk radar,” said Sara Benolken, head of TMT global industry at the group.
The report suggests that this focus on data protection and potential liabilities is aligned with a global trend for stricter privacy laws and tighter enforcement. Last month’s approval of the General Data Protection Regulation (GDPR) by the European Union (EU) Parliament – which significantly strengthens the penalties for data breaches and makes it easier for individuals to bring claims – highlights that companies must keep pace with new regulatory requirements.
“While it is understandable that regulatory change and legal risk are front of mind, none of the identified risks ranking lower down the scale should be ignored, given their potential to either harm or grow a business,” said Benolken.
Although the threat posed by cyber-attacks did not make it into the top three risks for the TMT industry overall, it did rank number one for the technology sector. The report urges companies not to overlook the fact that cyber vulnerabilities can exacerbate other risks such as those leading to data protection fines and penalties. According to the Index, digitalisation and technological advances is the megatrend most likely to grow its impact on the TMT industry over the next 10 years.
The global research found “startling differences” between how TMT organisations in different regions of the world view risk, with the number one perceived risk varying significantly across the globe. North American TMT leaders are most preoccupied with the threat of consumer product legislation and lawsuits.
In Southern Europe, the threat from new and emerging competitors was highlighted as the principle concern in the minds of respondents. In the Indian subcontinent the top risk was seen to be outdated legacy IT systems and infrastructure. For Asia Pacific industry leaders identified the top risk as uncompetitive compensation and reward schemes.
“In an industry marked by exciting innovation and disruptive business strategies, it’s important to understand both a present-day view of the risks facing the TMT sector and gain foresight into the future,” added Benolken.
“For us and our clients, risk is a path to growth. It is through the proper identification and management of these risks that companies are able to take on more risk and ultimately realise new commercial opportunities. We trust the findings will enable TMT organisations to successfully acknowledge and address current challenges as well as prepare for the future.”