Retail’s Cyber Challenge
Digitalisation is revolutionising how companies operate, and driving business leaders to think differently.
The pace of technological change is increasing, and dramatically transforming the global business environment.
At the same time, while traditional risks may be reduced, the potential cyber and technology exposures that businesses face continue to expand, presenting businesses with the possibility of substantial economic losses.
Marsh’s latest research was presented in The Changing Face of Cyber Claims report, which leverages insights gathered from Marsh’s claims data and from the data, experience, and expertise from Wavestone and CMS, to look at practical ways to manage and mitigate cyber risk and claims.
In these industry deep-dives, we gather the key findings from a number of key industries, each one impacted by cyber risk in its own, unique way.
Retail’s Digital Transformation
If you need convincing that digital transformation is real, glancing over at evolutions in the retail industry will suffice. Given that the ‘retail apocalypse’ started about a decade ago, the need to digitise and digitalise, save on costs, and automate have long ranked high on the agenda of retail companies.
These cost savings and automation efforts, as we often see in a digital transformation strategy that follows a staged journey, needed to enhance the shopping experience and enable retailers to reinvent themselves. Innovation, changes in business models, ecosystem approaches, the adoption of new technologies, a focus on brand purpose and value, different ways to engage with consumers: they’re all part of this ongoing exercise.
Key digital transformation drivers
- A shift from single-channel and multi-channel to omni-channel as consumers want to engage with retailers across many different channels with seamless interaction and readily available knowledge on products and offers.
- Supply chains are increasingly dependent on connected technology, as they move from separate online and high-street distribution centres to truly multi-channel supply chains.
- Enhancing order fulfilment, establishing inventory visibility, and ensuring accurate demand planning and scheduling to cope with the control of stock across all channels.
- Increased e-commerce and declining high street-based revenues lead to many retailers adopting cloud computing for some of their customer-facing revenue impacting applications.
- New payment systems are linked up with virtual storefronts, augmented reality systems and mobile trading platforms.
An evolving cyber risk landscape
Retailers are facing constantly evolving threats and potential sources of exposure.
Data breaches and subsequent liability are a real threat. Brick-and-mortar and online retailers are collecting reams of data about their customers to support apps, rewards programs, and other efforts to enhance the customer experience. They also collect sensitive personal information on employees, suppliers, and others throughout the course of normal business operations. Furthermore, the risk of digital storefronts or integrated supply chains being disrupted leading to business interruptions, has increased significantly with denial-of-service and ransomware attacks running rampant.