Cyber risks threaten the future of digitalisation according to new report

• Ireland

• General

11-03-2022

Eversheds Sutherland global report shows that sufficient focus isn’t given to some of the risks, challenges and obligations in this area

• Businesses are forecast to spend >$10 trillion on digital transformation over a five-year period

• 97% of corporate executives say the pandemic accelerated their digital transformation

• 64% of businesses say that building trust with stakeholders is a key focus for their digitalisation strategy

• 55% of products and services are at least partly digitalized today (v. only 35% pre-pandemic)

• Approx. 36% of large-scale M&A activity was in the tech sector in 2021.

A new report from global law firm Eversheds Sutherland shows that, even before the War in Europe (and any potential threat of Russian cyberattacks), cyber risks threaten the future of digitalisation, according to global business leaders.

The report about the future of digitalisation, titled ‘Shaping the future of digitalization: global perspectives on digital technologies, risk and corporate digital responsibility’, considers where next for digitalisation, focussing on areas such as adoption; M&A activity; risks and challenges in digitalising; and approaches to ethics and corporate digital responsibility (CDR). It also highlights the key findings from the firm’s survey of 700 senior executives globally on the uptake of digital technologies.

According to the survey data, businesses in the US, Europe, the Middle East and China are most concerned with cyber risk, as are those businesses in the technology, media and telecom; finance and healthcare sectors.

Misalignment of digitalisation strategies and approaches to CDR is causing a complex web of financial, stakeholder and reputational business risks, including penalties for non-compliance. This report allows companies to benchmark where they are on their digitalisation journeys and it provides relevant insights into the critical areas to focus on to mitigate risk and ensure stakeholder value. The report also includes case studies and commentary from senior executives, including from the following global businesses; AstraZeneca, Microsoft, Roche Pharma, Rolls-Royce, Thales, VMware.

The key takeaways include:

Keeping pace with the changing regulatory landscape is difficult

63% of businesses say the complexity of technology and related laws makes it challenging to assess their risk and liability.

Cyber risk dominates the digitalization agenda, but other risks need attention and are being overlooked by many

For example, only 17% of respondents identified operational disruption as one of their top three risks in implementing their digitalisation strategy, 11% identified IP infringement and 9% identified third-party risk.

Using data responsibly

Only 13% of our respondents are ‘very confident’ in understanding the legal basis for using and processing data, and determining who bears responsibility if not correctly implemented. This is particularly important in relation to a number of digital technologies, including cloud, artificial intelligence and data analytics tools.

Action in relation to ethics and CDR is insufficient

Only 33% of respondents have implemented governance frameworks, including rules, practices or processes to direct and control employee and vendor behaviour and ensure oversight and compliance with applicable laws and internal policies. And, just 20% of respondents have CDR oversight at the board level – in certain jurisdictions, and for certain industries, the regulation mandates oversight.

Only 27% of companies tailor CDR for specific markets and technologies

Yet the laws vary considerably across the globe.

Marie McGinley, Partner and Head of Eversheds Sutherland’s Intellectual Property, Technology and Data Protection Departments based in the Eversheds Sutherland Dublin office, practises in both contentious and commercial intellectual property/technology matters for a broad range of domestic and international clients. Commenting on the report findings, Marie said:

“When it comes to digitalisation, businesses worldwide are seeking a competitive edge and the global pandemic has catapulted digitalisation into immediate focus at breakneck speed. Businesses that traditionally were not considered technology-focused have embraced digital transformation as a pivotal strand of their strategy, in recognition that no sector can ignore the commercial gains and game-changing nature of digitalisation. However, these benefits, do come with numerous risks, challenges and obligations that need to be understood and navigated to stand the best chance of long-term success.

“It’s estimated that businesses are forecast to spend more than $10 trillion on digital transformation projects over the next five years. This is not unexpected because 97% of corporate executives say that the pandemic accelerated their digital transformation. With the speed of growth that comes with this digitalisation, understanding the plethora of laws and guidance in this area is going to be critical for success.”

To download the full report: see here.

For further information, please contact:

Marie McGinley: Partner & Head of IP, Technology & DP - MarieMcGinley@eversheds-sutherland.ie

• Marie McGinley
• Partner
• +353 1 6441 457
• +353 1 6441 457

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