Washington, D.C. and London – Global law firm Hogan Lovells released The New Riskonomy report that investigates the most significant risks and challenges in today’s technology landscape, including cybersecurity, data management and generative AI.
The report reveals that most companies are revisiting, improving and urgently investing in their technology risk management practices.
Some 91% of companies are exposed to moderate or high levels of technology-related risk, and two-thirds of business leaders report that their organizations could be taking more proactive approaches to these risks.
Successful businesses are embracing transformative tech and utilizing legal counsel to stay ahead of emerging risks, the report says.
The New Riskonomy was compiled following a survey seeking the opinions of 1,500 C-suite executives, general counsel and compliance leaders globally – including leaders from the U.S., U.K., China, Germany and Brazil.
Business leaders were surveyed across key sectors including financial services, tech and telecoms, energy, automotive and transportation, life sciences, lifestyle and consumer, and manufacturing.
“Companies across industries are racing to gain a competitive edge through using emerging technologies such as blockchain, IoT and AI. At the same time, every transformative technology also presents risk — and these risks can be business critical,” said Des Hogan, Global Head of Litigation for Arbitration and Employment.
The report found many business leaders are struggling to navigate the complex nature of changing technology legislation and new compliance obligations. This report highlights some of the areas that merit particular focus.”
Technology such as generative AI can help unlock incredible efficiencies, the survey said, but embedding proper guidance for generative AI should be a priority for all businesses as it grows in popularity and adoption.
Without the right knowledge and policies in place, companies risk a domino effect of factual inaccuracies, IP rights violations, data protection and ethical misconduct, the report said.
Organizations need to ensure the appropriate strategies and policies are in place and that they’re taking proactive measures to anticipate and manage problem areas, Hogan noted.
Right now, organizations are taking different approaches:
- 43% of leaders who work at organizations that have banned the use of generative AI, do not believe any additional policies are required.
- 38% of organizations that allow the use of generative AI have created their own bespoke generative AI system, perhaps to be more cautious while still innovative.
The report found that macro risks from the wider world continue to sow fear into leaders from every sector, especially cybersecurity concerns. Conducting a cyber health check is vital for organizations, providing a safe place for individuals and teams to understand their roles in times of crisis, as well as identify vulnerabilities before it is too late. The report found:
- Cybersecurity was cited as the second-highest concern when it comes to potential litigation disputes and investigations.
- But over a third (36%) of C-suite and compliance leaders identify their organization’s cybersecurity strategy as being in its infancy -- considering themselves to have a high level of exposure to cybersecurity threats. This was highest in tech and telecoms (45%) compared to 30% of manufacturing organizations.
The report includes Hogan Lovells’ Riskonomy Radar that reveals an organization’s exposure to technology risk, mapping it to one of three ranges:
- Low risk: Indicates low levels of tech-risk exposure and suggests businesses can maintain current practices and monitor for any changes.
- Moderate risk: Indicates moderate levels of tech-risk exposure – it’s recommended that businesses revisit their strategy and improve current practices.
- High risk: Indicates high exposure to tech risk, suggesting businesses will be vulnerable if they do not urgently prioritize and invest in their tech-risk management.
The acceleration of technology development poses challenges for leaders to stay on top of the corresponding risks. Our report and Riskonomy Radar analysis found:
- Organizations making the largest investment into their technology plans are high-growth organizations, on average, investing 13% more of their IT budget to protect against technology-associated risks.
- And this investment pays off; 42% of high-growth organizations are in the low risk range of Hogan Lovells’ Riskonomy Radar (compared with 20% of no-growth organizations), and 38% of no-growth organizations are in the high risk range (compared with 29% of high-growth organizations).
Read more about The New Riskonomy here, including how C-suite and compliance leaders can approach the tech risks they’re facing and how they can devise a clearer path to minimize exposure.
