How to Take the Risk Out of Innovation
Rapid innovation, increasingly complex regulations, and growing contractual demands are creating potentially catastrophic risks for communications, media, and technology companies. Not properly mitigating these exposures could put entire businesses at risk. But those companies that understand their emerging risks and treat them with a range of capital, operational, and contractual solutions could outpace competitors by taking the risk out of innovation.
The Challenge of Emerging Risks
Marsh recently conducted a survey of 120 risk professionals from across the industry, which revealed a number of challenges. One example: Many companies have limited loss experience with claims related to new applications of technology and lack confidence that those risks are properly addressed.
When asked to identify the risks of greatest concern to their companies, 77% of respondents selected data security and privacy risk. Yet only 7% of respondents reported having suffered a related loss. Similar gaps were observed for other top risks, including technology errors and omissions, intellectual property, and regulatory compliance.
In fact, of the top 10 most worrying exposures they identified, only three generated losses for more than 15% of respondents — suggesting that the potential severity of a loss, rather than prior loss experience, drives risk professionals’ perception of risk.
The evolving nature of the top risks also presents a challenge in addressing them, with survey respondents reporting less than 50% confidence in their ability to minimize each of the top five risks they identified. For example, only 36% believe their current risk programs have mostly or completely mitigated data security and privacy risk, and 23% believe they are adequately protected against regulatory risk.
Managing Risk for Competitive Advantage
Survey respondents indicate risk management is valued based upon its ability to protect an organization. Yet customer demands, insurance pricing, and budgets are the top three factors driving insurance program design.
Despite these seemingly conflicting drivers, your risk management team can stand out from the crowd by:
- Regularly reviewing current and emerging risks.
- Applying data to risk management and insurance decision making.
- Engaging and educating colleagues and involving them in risk discussions.
- Fostering excellence in execution, including working closely with senior leaders and other key stakeholders.
By getting ahead of their emerging risks, communications, media, and technology risk professionals can essentially take the risk out of innovation by better positioning their organizations to move quickly into new areas while limiting balance sheet exposure.
For more on this topic, read Marsh’s 2017 Communications, Media, and Technology Risk Study. And tell us how tech innovations are creating opportunities and challenges for your organization on Twitter using the hashtag #CMTSurvey17.