Technology and communications

How would you describe the impact of COVID-19 on your business?

Survey highlights

Half of respondents in this industry were from North America or EMEA, and 26% were from APAC. Overall, there were the same number of respondents in the recovery phase (43%) and the reshape phase (43%). Eighty percent of respondents in the technology and communications industry did not consider pandemic a key risk, and just 30% had a pandemic plan in place prior to COVID-19. This is in line with the overall industry benchmark. More than half (53%) of respondents agreed that their business was resilient, and 13% stated their business had thrived because of the pandemic — higher than the overall industry benchmark (6%). Forty percent of respondents expect COVID-19 to impact their business for a period of less than a year and 44% for a period between one and two years. Sixty-six percent of respondents experienced supply chain issues, and 34% reported demand issues due to a drop in consumer demand. Overall, respondents were optimistic around risk management procedures. All respondents stated that their company’s risk management response efforts around COVID-19 were sufficient.

Industry insights

Protecting people and assets has been the priority for this industry during the pandemic. We have seen tech companies making swift decisions to seek remote working as a long-term strategy, but this creates the need to ensure employees are supported to avoid future challenges of health and wellbeing. In some areas, wellbeing is linked to the risk of burnout, and this strongly links to employers’ recognition that they need to retain key talent. This is why we have also seen the importance of employee value proposition in this industry. This industry has a complex and sophisticated set of interdependencies in the supply chain, from security to manufacturing to technology R&D. This has created demand- and supply-led challenges and explains why respondents from this industry expressed an increased desire to review the supply chain. Parts of the supply chain may consist of smaller teams without capital backing, making them more susceptible to failure and thereby creating counterparty risk for these companies. Respondents in this industry ranked revisiting business strategy as a higher priority than most others did. Given the dynamic and fast-paced change in the industry, this is not surprising. This is strongly linked to new product development and capital investment planning. Established telecom businesses face significant risk from competitor activity, especially businesses that were “born digital.” The newer companies do not have some of the legacy costs (pension liabilities) facing long-standing businesses, allowing them to be much more agile. The tech and telecom industry continues to see a considerable level of M&A activity, which isn’t surprising given previous economic crises that demonstrated the ability of companies in this industry to attract capital. Therefore, we believe the monetization of intangible assets is also becoming important to balance sheet performance.

Proportion of organizations facing supply chain issues

Respondents in this industry ranked business model disruption as the most significant future shock. The growth and agility of digital organizations create significant risk to long-standing organizations. Nowhere is this more relevant than in the media industry, which is challenged by new digital platforms and ways of engaging with customers. Technology disruption is linked to increased reliance on technology resulting from the pandemic. Not only does this present a challenge to organizations’ own operations but it poses new and greater risks as their customers become more reliant on technology. Technology failure or disruption, which could arise from the aggregated exposure from cloud-based technology, could impact across many key risks. Efforts to ensure increased levels of resilience will therefore be required in the future.

Future shocks

  1. Business model disruption
  2. Economic disruption
  3. Technological disruption
  4. Geopolitical tension
  5. Another health crisis/pandemic