Contingent business interruption risk has dethroned cyber risks as the top risk agenda for Asia’s technology companies, according to the latest study.
Global broker Marsh’s latest Global Technology Industry Risk Study 2023 – Asia Perspectives revealed that ongoing supply chain volatility that leads to income loss for businesses surged to the top spot, rising six ranks from its seventh-place finish in 2022. Supply chain disruption, which was not in the top 10 last year, has now taken second place, followed by reputation risk, product recall, and intellectual property risk.
The report also noted that increased frequency and severity of extreme climate events are adding to the substantial losses that tech companies face, stemming from damage to physical assets and power instability.
The current unstable geopolitics has also led to a shortage in critical raw materials such as rare earth metals, an issue compounded by the current situation between China and the island of Taiwan – the latter of which is the world’s largest advanced semiconductor chip manufacturer. Reputational risk also poses greater threats, especially as more scrutiny is placed on Asian firms’ operations and their individual ESG frameworks.
Despite the challenges presented by the current economic conditions, the region is still amid a talent war as only 17% of tech companies are considering a reduction in their workforce compared to the 46% for companies globally. In its study, Marsh attributed this to Asia being more dependent on a highly skilled workforce.
Despite being dethroned from its top spot, cyber resilience could still present a potential blind spot for Asia’s tech companies that are inundated with competing priorities. The broker’s study revealed that data security and privacy fell from the top risk to 10th, while digital business interruption risk fell from third to ninth. This is worth noting as Asia was the target of over 31% of global cyberattacks in 2022, making it the most targeted region worldwide.
“In today’s tightly-knitted risk environment, any single risk event inevitably impacts other areas, across different locations and industries. Asia technology companies should consider working with a trusted risk advisor to mitigate and manage risk throughout their entire ecosystem by developing a holistic view of risks to their business and incorporating tools like predictive analysis and scenario planning within an Enterprise Risk Management approach,” said Larry Liu, Marsh Asia communications, media, and technology industry leader.
Another recent study from the broker revealed that cyber insurance rates in Asia surged by 8% in the second quarter of the year, the same rate it had in the previous quarter.
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