Enterprise Risk Management - Technology Industry Spotlight

Five Questions Technology Leaders Should Ask About Enterprise Risks

Technology providers today operate in a volatile risk environment that varies across an industry that includes software, hardware, media, and telecom sectors. AI adoption, cyberattacks, and geopolitical economic uncertainty are just a few of the risks that, if left unchecked, can derail operations before leaders have time to react to the initial problem. As a result, enterprise risk management (ERM) has become less about compliance and more about operational survival.

Some organizations may manage these risks in isolation — a compliance report here, a heat map there — treating risk management as a periodic exercise rather than an operating discipline. That approach is no longer sufficient. A strong ERM strategy connects risk directly to performance, giving leaders the coordinated visibility and accountability needed to protect production and make faster decisions under pressure.

The following questions and answers shed new light on ERM and how an ERM assessment can help technology organizations reduce risk and operational disruption.

What Are the Most Significant Enterprise Risks Facing Tech Organizations Today?

• Artificial intelligence (AI) 
  AI adoption has ramped up the past few years. Technology organizations find it necessary to adapt to innovation while managing disruption to their business models.
• Compliance 
  Regulations related to AI, cybersecurity, privacy, digital markets, and cross-border operations are complex.
• Data protection 
  Personal data and proprietary data, including intellectual property, is vulnerable to cyber threats and data breaches.
• Supply chain 
  No matter the cause, disruptions in the supply chain significantly affect business operations for tech organizations, particularly those focused on hardware or software.

How Have Top Risks Changed in Recent Years, and What New Risks Are Emerging?

• AI adoption: Traditional technology risks have become more AI-focused. AI usage has expanded to include services typically provided by some tech organizations, including software development and customer services.
• AI governance: Technology organizations may lack policies and protocols that govern the use of AI platforms. This potentially increases the possibility of data breaches, data leakage, and stolen intellectual property. When left without official guidance, employees may engage in shadow AI use, further increasing risk to the organization.
• Regulations: Tech leaders may be feeling uncertain about strategic planning due to the growing number of laws and regulations related to AI, cybersecurity, privacy, digital markets, and cross-border operations.
• Data protection: AI has provided new capabilities to tech organizations — and bad actors intent on accessing proprietary and personal data. A strong defense is needed, backed up by clear protocols on how to handle critical issues.
• Third-party risk and digital ecosystems: Whether providing SaaS and cloud services to customers or using them within their own organization, new risks will be emerging for tech leaders to manage.
• Talent and workforce: The rapid growth of AI and other digital innovations may have outpaced the ability to train and hire skilled workers. The corresponding risk of human error could affect the organization’s ability to achieve its business goals.

Where Do Technology Organizations Most Commonly Struggle With ERM?

• It’s crucial to develop formal risk management procedures that connect ERM to business strategy.
• Some organizations prepare extensive documentation about general risks, including disruptive innovation, but do not convert that documentation into actionable planning.
• Tech leaders may find it difficult to identify how AI could pose a risk to their operations and business planning before problems arise.
• As technology rapidly evolves, it can be difficult for tech leaders to realize the full scope of cybersecurity risks and then act to protect their organization from cyberattacks and data breaches.
• Risk management often occurs in silos with the coordination and accountability that could strengthen a technology organization’s response to threats.
• Keeping pace with the risks that innovation creates is often a challenge for tech leaders.
• Enterprise risk can increase when key positions are left unfilled, and the workforce lacks the skillset and training to handle new technologies.

How Can Tech Organizations Better Connect Risk Management to Operational Performance and Strategy?

Contact BDO today to learn more about our Enterprise Risk Management services and how we can help your organization build resilience for the future.