The way we work is evolving, so too are the risks
Digital transformation is fundamentally changing how businesses operate and deliver value to their customers. But with more digital solutions than ever before, it can be tricky for business owners to know what to prioritise and plan for the multitude of emerging risks they carry.
Even before Covid-19, transformative technologies were entering workplaces as a way for businesses to offer more seamless, on-demand products and services, establish a competitive advantage and enable better collaboration within and between organisations.
However, when the pandemic hit hard in 2020, many businesses were forced to move online and accelerate their reliance on technology to meet changing customer needs and accommodate remote work set ups. Those that didn't adapt were at risk of not surviving.
With so many digital solutions now available, it is imperative that businesses understand the technologies they choose to adopt and are prepared for the potential risks they bring, such as increased cyber threats.
An evolving digital landscape
A recent survey by Chubb has found that while most SMEs are keen to incorporate digital solutions into their strategic goals, there is still a lack of understanding and preparedness for the potential risks they carry.
Some of these risks include the legal exposure from collecting large data sets, liability concerns from the misuse of client data, reputational and financial risk due to a security breach and machine errors due to technology or system failures.
According to the survey, there were four key digital trends that are likely to have the most significant impact for businesses who are pursuing digital transformation:
1. Navigating digital customer demands - 86% of business owners reported that their success is likely affected by how well they can build digital experiences and enable seamless delivery of products and services to their customers.
Risk: adopting multiple digital channels and tools is a great way to interact with and offer services to customers but it is important that businesses continue to adhere to any applicable laws governing data collection and usage to avoid unintentional privacy violations and data breaches.
2. Harnessing the power of data - Investing in the cloud and other advanced technology plays a vital role in a business's ability to maintain its plans for growth and remain competitive. Adopting AI technology into business processes was shown to be the top priority for Australian SMEs amongst survey respondents.
Risk: It is important to fully understand any new technology before incorporating it into your business processes. Failure to do so can lead to problems such as vulnerable data storage, which can leave your customer, employee, and partner data at increased risk of cyber breaches and electronic theft.
3. Supporting a transformed workforce - Due to Covid-19 and associated restrictions, businesses were forced to shift to a remote workforce. With this came a new set of challenges and left many businesses open to different forms of liability risks. Now years into the pandemic, businesses are now placing more focus on hiring workers with the right skills to accommodate their new tech capabilities.
Risk: Reliance on home networks and the use of contract employees to deal with staffing challenges has further increased businesses vulnerability to cyber threats.
4. Playing in the global market - This is about expanding customer reach and building opportunities outside a business's domestic market by collaborating with other large business or social platform players already in the market.
This can help smaller businesses utilise an online platform that's better equipped with global capabilities and localised knowledge.
Risk: Exposure to new and unknown overseas risks and regulations make businesses more vulnerable. Expanding into non-domestic markets can also present challenges, including changing local laws, taxes, and regulations.
Cyber exposure is also heightened with this type of expansion. For example, currency fluctuations affect fund transfers and are susceptible to infiltration by cybercriminals. In addition, a breach or break-down of third party systems can also cause disruptions or even shut down a business' operations.
How Coverforce can help
While digital transformation facilitates many opportunities for SMEs, it also presents a new set of liability and cyber risks.
Our team of experienced brokers are here to provide personalised risk advice and tailored, competitive insurance solutions that can help minimise your risks and ensure your business is protected and given the best opportunity to grow. If you haven't already, get in contact with your local Coverforce Office or call 1 3000 COVER.
The information provided in this article is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. If you require advice that is tailored to your specific business or individual circumstances, please contact Coverforce directly.
REFERENCES
- Chubb: Digital Business Accelerated Research Report
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