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Three technology risk considerations to be aware of in 2024 and beyond

The technology industry is at a crucial inflection point, both in Canada and globally. The rapid integration of new digital technology — particularly artificial intelligence (AI) and automation — has transformed how firms deploy solutions, build efficiencies into their processes, and scale.
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By Chris Johnson , 

National Tech Industry Leader

06/12/2024 · 5-minute read

The technology industry is at a crucial inflection point, both in Canada and globally. The rapid integration of new digital technology — particularly artificial intelligence (AI) and automation — has transformed how firms deploy solutions, build efficiencies into their processes, and scale. AI-based tools and solutions now filter and integrate into every facet of business, from sales and customer service to coding, content creation, security, and business intelligence.

As tech firms continue to embrace new tools in the spirit of innovation, they must also consider the heightened risk exposure that accompanies them, namely due to an increase in cyber vulnerability and an evolving regulatory environment. With transformative digital technology in the spotlight, businesses cannot afford to overlook the existing risk landscape either, marked by ongoing economic uncertainty and a host of people-based risks.

Here, we outline three risk considerations for tech firms and business leaders to keep front of mind during risk management discussions in 2024 and onward.

1.     Cyber risks and regulatory environments are evolving with new tech

With nearly three-quarters of organizations having adopted AI in some capacity, it is obvious that AI has already transformed business operations and revealed exciting opportunities for efficiency, user experience, and agility. AI’s success coincides with other significant advancements in technology, including developments to the internet of things (IoT) and improved data processing with quantum computing. Progress is happening in real-time, meaning the full capabilities of these technologies still remains somewhat unknown. However, it is clear that AI has already led a significant paradigm shift and will continue to shape the future of work. Not simply a new tool, AI has created a before-and-after moment for society at large.

While this is a mostly positive development, tech firms need to pay attention to the risks that come on the heels of innovation. Among the most urgent AI-related risks is the dissemination of misinformation and disinformation, named the most severe global risk anticipated over the next two years in the 2024 Global Risks Report.

On a region-by-region basis, remaining compliant with new cyber and data security regulations is also critical. In 2022, Canada introduced Bill C-27, including the Artificial Intelligence and Data Act (AIDA), to ensure safe design, development, and use of AI systems across the region as well as proper controls of data. Bill C-27 is an important step towards a federalized understanding of proper data governance. 

The proposed bill is currently in the House of Commons and expected to pass within the next year. Once in effect, it will be the strongest legislation supporting data controls ever created in the country. Similar legislation is being worked on across most developed countries, and corporations will need to follow each individual set of rules if they wish to conduct business in those countries.

Looking ahead, tech firms should stay informed and attentive to any new legislation or amendments to continue implementing best practices for data privacy and security and to minimize potential non-compliance.

2.     Economic uncertainty continues to impact customer behavior and needs

The cost-of-living-crisis and inflation remain significant challenges globally in 2024, according to the Global Risks Report. To meet the evolving needs of customers, tech firms need to think strategically about how customer needs are changing and what they can do to better meet those needs.

For example, software companies are continuing to see a shift in customer preferences towards subscription-based models and customizable services. This shift is further exacerbated by increased economic constraints and decreased customer spending. Similarly, customers are no longer satisfied with off-the-shelf solutions. Instead, they seek more adaptable, tailored solutions that meet their unique requirements, giving rise to a la carte models of service.

Additionally, the COVID-19 pandemic accelerated the digital transformation of many traditional companies, leading a surge of rapid growth and increased cashflow. Now largely on the other side of that digital boom, recent economic uncertainty has forced companies to reassess their strategic bets and allocate resources more efficiently. Agility has become a priority, with companies striving to be lean and nimble to achieve their mission-critical goals.

3.     Attracting and retaining talent is a necessary growth objective

Canada’s tech talent force continues to grow, with over 150,000 new jobs added between 2020 and 2023, increasing by 15.7% and outpacing the US (11.4%), with 5 of the top 20 North American tech markets now being in Canada for the first time.*
*Source: https://www.cbre.com/insights/books/scoring-tech-talent-2023

Attracting and retaining highly skilled talent remains a critical priority in today's uncertain economic climate, particularly for tech firms grappling with shrinking budgets and tighter margins. Skilled labor in emerging fields such as AI, quantum computing, and cybersecurity are in high demand but increasingly limited supply, making it crucial for tech firms to rethink their recruitment and retention strategies. Factors such as the rising cost of living, limited corporate capital, and competition from larger enterprises and innovators make it challenging to attract and retain the right people.

For Canadian-based businesses, better recruitment and retention is particularly important because attraction to US opportunities and multinational hiring processes can further deplete the pool of available candidates.

To mitigate the impact of the labor shortage, tech firms need to prioritize work-life balance and tailor compensation packages to individual lifestyle goals. It is also important to create a fair and inclusive workplace environment that addresses the unique concerns of employees and inspires them to stay. Meeting strategic and growth objectives at the organizational level begins with attracting and retaining the people who power it.

Staying ahead of the curve

No one person or firm can predict the future with absolute certainty. However, leaders can remain nimble and adaptive by understanding the tech risks that impact their operations on both a regional and global level. Remaining attentive to the variety of risks related to regulatory environments, market changes, and people can better position firms to implement meaningful solutions that promote long-term resilience.

     

Contact a Marsh representative for more information.

Our people

Chris Johnson

Chris Johnson

National Tech Industry Leader

  • Canada

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