Business interruption ranked highest risk for Asia's tech sector
Risk Skyrockets From Seventh To First In Just A Year
According to the most recent study, the risk of contingent business interruption has taken over as the main concern for technology companies in Asia, surpassing cyber risks.
The most recent Global Technology Industry Risk Study 2023 - Asia Perspectives conducted by Marsh, a worldwide broker, has unveiled that the consistent instability in supply chains, resulting in financial setbacks for companies, has elevated to the highest position. This increase of six ranks from its previous placement in seventh position in 2022 demonstrates the severity of the issue. Moreover, supply chain disruption, which was previously not considered among the top ten risks, has now claimed the second spot. Following closely behind are reputation risk, product recall, and intellectual property risk.
The article also mentioned that the growing frequency and intensity of extreme weather conditions are contributing to significant damages experienced by tech firms, resulting from the harm caused to their physical resources and unstable power situations.
The present turbulent global politics has also caused a deficit in vital basic materials like uncommon metallic elements, a problem made worse by the ongoing conflict between China and Taiwan – the latter being the leading producer of advanced semiconductor chips worldwide. Moreover, there is an increased vulnerability to reputational harm, particularly as greater attention is focused on the operations of Asian companies and their respective environmental, social, and governance (ESG) structures.
In spite of the difficulties brought about by the existing economic situation, the area is still in the midst of a fierce competition for skilled individuals as merely 17% of technology firms are contemplating downsizing their employees, in contrast to the global average of 46%. Marsh, in its research, credited this phenomenon to Asia's greater reliance on a highly proficient workforce.
Even though Asia's tech companies are overwhelmed with other important tasks, they shouldn't overlook the potential vulnerability of cyber resilience, despite losing its position at the top. According to a study conducted by the broker, data security and privacy that used to be the most significant risk dropped to the tenth position, while the risk of digital business interruption fell to the ninth position from being third. It is important to take note of this, especially since Asia was the primary target of more than 31% of cyberattacks worldwide in 2022, making it the most frequently targeted region globally.
"In the current interconnected and complex landscape of risks, every individual risk occurrence inevitably has consequences in various sectors and regions. It is essential for technology companies in Asia to collaborate with a reliable risk consultant in order to effectively minimize and handle risks across their entire ecosystem. This can be achieved by adopting a comprehensive approach to Enterprise Risk Management, which involves gaining a holistic understanding of the risks impacting their business and utilizing tools such as predictive analysis and scenario planning," stated Larry Liu, who is the industry leader for communications, media, and technology at Marsh Asia.
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