The seismic impact technology is having on private equity firms presents a seemingly unlimited array of potential to provide value, troubleshoot problems, and support the future growth of brands agile enough to adapt.
Despite the overwhelming opportunities, technology also poses risks – some of which have far-reaching consequences. Private equity firms need to think beyond the boundaries of technology risk management and consider the impacts on a global scale.
Accenture predicts cybercrime will cost the world economy somewhere in the region of US$5.2-6 trillion dollars over the next five years. Because of the wealth of data held by private equity firms, cybersecurity has to be a priority to guard against an increase in phishing, social engineering and ransomware attacks.
Hacking and Online Identity Theft
Hacking breaches and unsecured Wi-Fi networks pose a threat to sensitive data. Identify theft through tactics such as impersonation and deception fraud gives hackers to compromise customer accounts. Companies not only have an obligation to encrypt data but also create preventative systems and educate staff and customers how to avoid online identity theft.
Shortage of Expertise
The Centre of Cyber Safety and Education reveals a serious shortage of talent in various technologies exacerbates the threat of a computerised future. A lack of expertise overburdens the current throng of tech employees and staff that have to work with AI, robots and other tech products put a firm’s reputation at risk.
The World Economic Forum warns that technology is the driver of inequality. The emergence of robotics and automated systems has already had a significant impact on workforces across several sectors. Technological advances have the potential to escalate unemployment, stagnate wages and widen the inequality gap. Companies cannot survive without a customer base with spending power.
Disruptive technology is changing the way people work, interact and consume information. The rapid upheavals have exposed businesses and consumers to issues over ethics and privacy. Now governments are catching up, regulations will undoubtedly have an impact on business models.
What technology risks are you facing? PEA has the expertise and the vision to help you navigate the technological landscape and provide you with a safe path towards the future. Get in touch today.
James Orrick holds a Masters in Corporate Governance from Bournemouth University, a BSc (Hons) in Accounting and Finance from the University of Essex, is a Fellow of the Association of Chartered Certified Accountants and the Institute of Chartered Secretaries and Administrators.