The technology industry has experienced significant growth over the past several years, propelled by the ever-increasing reliance on tech products and connectivity. But economic uncertainty and difficulties accessing capital are threatening to change this trajectory.
As they navigate a more difficult environment, both hyper-growth and established companies are reviewing their evolving risk landscape and seeking to identify new opportunities for innovation-fueled growth.
Innovation amidst a challenging environment
In an ever-changing marketplace, agility remains key to enable tech companies to continue growing. At the same time, a plethora of risks — such as data security and privacy, digital business interruption, and technology errors and omissions — continue to challenge the industry. Further, disrupted global supply chains have made it more difficult for tech companies to secure critical components, adding complexity to an already challenging risk landscape. As existing risks evolve and new ones emerge, tech organizations have become more concerned about potential reputational risks that could lead to loss of customers and impact their bottom line.
Despite these challenges, the most advanced organizations are forging ahead with innovations that have the potential to change the world. Generative artificial intelligence (AI) platforms, for example, are experiencing staggering adoption rates. Digital assets are changing the way we buy and sell products and services. And the market for electric and autonomous vehicles is expected to continue growing. The majority of respondents to Marsh’s 2023 Global Technology Industry Risk Report have said their companies are developing new products or working to develop new relationships that will help them expand revenue.
A balancing act integral for growth
But while innovation is an important bedrock for growth, it can also introduce significant risks that tech companies need to be able to quickly identify and address. Further, fresh uses for existing products and services may bring about new risks that need to be identified, measured, and mitigated.
The emergence of new risks is taking place at a time when many tech companies are facing increased costs for insurance coverage. Property rates, for example, have increased significantly in the first half of 2023. Cyber premiums, for example, have more than quadrupled for tech companies between 2012 and 2022, although in general, cyber pricing has recently moderated. This reality has driven many tech companies to rethink their risk transfer strategy and take actions to preserve their operations, including seeking new insurers.
Amidst these challenges, there is increased emphasis on the need to invest in a robust risk management strategy. According to the 2023 tech report, there’s been a notable increase in tech leaders that believe risk management and insurance has an important role in enabling public trust and positive reputation.
As they seek to address the evolving risk landscape, tech leaders should focus on solid risk management practices and work with their insurance advisor or broker to build an insurance program that best fits their risk profile. The team of specialists within Marsh’s Global Technology Practice can help you assess your company’s specific risks and work with you to build an effective risk management and risk transfer program that helps you manage and mitigate your exposures.
Our dedicated US technology industry specialists draw on regional and global insights to provide risk and insurance advice and guidance specific to your needs. Their diverse knowledge and experience, including in e-commerce, esports and gaming, fintech, hosting and cloud services, and design and manufacturing of electronics components, makes our team well-positioned to you help manage your company’s most pressing risk resilience needs.
For more information, contact Priya Nathan, Vice President at Marsh, via email at Priya.Nathan@marsh.com.