Emerging risks, evolving stakeholder expectations and increased scrutiny from governmental agencies are raising the complexity of the environment in which technology companies operate. In a four-part series, Protiviti examines the changing risk landscape and presents 10 ideas for tech executives and directors to help them make the transition to the more balanced focus of the responsible tech firm of the future.
The first installment, available here, focuses on the dynamic environment in which technology firms operate.
Global tech companies are being called out for a host of negative issues, including gender imbalance in executive and board positions, a lack of diversity throughout the workforce, the limited protection of customer and consumer data, the lack of controls around the policing of content on social media sites, and in some cases, corrosive cultures at the executive level and throughout the organization.
The increased awareness of the “commoditization” or “commercialization” of consumer data has created a debate about the line between consumer choice and consumer surveillance. The rollback of federal net neutrality regulations to open the door for state-level regulation – as advocated by telecoms but opposed by tech firms – has also made things interesting, with the ultimate impacts unclear at this time.
As these and other issues complicate the operating environment, the industry faces calls for increased regulation and oversight, particularly as the largest players continue to dominate the industry and have a growing impact on the lives of people across the planet.
The imperative for tech executives is to stay ahead of the change curve. According to the most recent survey from Protiviti and North Carolina State University’s ERM Initiative, technology, media and telecommunications (TMT) executives responding to the survey identified the following as the top two risks for their organizations in 2018:
- Rapid speed of disruptive innovations and/or new technologies within the industry may outpace the organization’s ability to compete and/or manage the risk appropriately, without making significant changes to the business model.
- The organization’s culture may not sufficiently encourage the timely identification and escalation of risk issues that have the potential to significantly affect core operations and achievement of strategic objectives.
These risks are interrelated and point to the need for pause to reflect on how tech firm executives can better manage them. The emerging importance of corporate social responsibility (CSR) is also a significant contributing factor to the current environment.
All of this suggests that the level of scrutiny global technology companies are facing will not subside soon, if it ever does. The specter of more potential election meddling through social media sites, the continued impact of fines for market practices, the significant reputation hits stemming from executive behavior, and other developments suggest that culture, governance and risk management matter in shaping the responsible technology firm of the future.
Tech industry leaders who effectively and proactively manage corporate governance, diversity and inclusion as well as build a reputation for providing strong customer data protection and transparency have the opportunity to forge a stronger, more lasting reputation in the market.
In our view, the emphasis on understanding risks and establishing and maintaining appropriate controls is increasing in the C-suites of large technology companies and, in particular, in their boardrooms. In subsequent installments of this series, we will examine ideas around addressing Corporate Governance and Regulatory Compliance, Market Forces, and Corporate Social Responsibility.