In today’s global business landscape, technology companies are experiencing substantial growth, fueled by digital transformation, innovation and the ability to scale rapidly across global markets. From cloud computing to artificial intelligence (AI), businesses are expanding their reach and impact at a remarkable pace.
With such rapid growth comes increased exposure to a variety of risks. As companies continue to scale, the need for comprehensive and Global risk management solutions becomes critical, particularly when navigating international markets.
What Makes Successful Tech Companies Grow So Quickly?
Technology is a domino effect. Every major improvement opens the door for new opportunities and even more advanced technology to come in. There are four key factors responsible for rapid technological growth:
- Digital Transformation: Businesses across all industries are adopting digital technologies to improve efficiency. This shift creates a demand for technology products, services and solutions, driving further growth opportunities for technology companies.
- Global Reach: The internet has enabled companies to reach a global audience without needing a physical presence in every location, affording the opportunity to open up additional geographic and demographic markets.
- Data and Artificial Intelligence (AI): With the rise of big data and AI, companies can collect and analyze a vast amount of information to improve products, personalize user experiences and make informed business decisions, leading to increased demand for advanced technology products and services.
“Accelerated business growth often comes down to the global adoption and utilization of these technology offerings. Data is the new gold or oil as it an integral component of every industry and every organization’s DNA and that isn’t changing,” says George Bannell, Technology Industry Practice Leader, The Hartford. “There is massive corporate (and personal) investment in evaluating how to best maximize, leverage and exploit the efficiencies, capabilities and enhanced functionality made possible by the technology industry’s products and services. Virtually no aspect of human life is untouched by the concept of “technology. ”
As Technology Companies Expand Overseas, So Do Their Risks
Global technology companies are now facing increasingly complex landscapes filled with various risks. As businesses expand their global footprint, the challenges increase. From heightened regulatory scrutiny and cybersecurity threats to geopolitical tensions and rapid technological advancements, expanding companies need to consider potential business challenges that may change with events in the nations or regions where they plan to operate.
Technology Companies Are Facing Greater Regulation Around the World
As companies are expanding their operations globally, it can be hard to keep up with each country’s changing regulatory landscape.1 Navigating these risks is crucial for maintaining growth, but this also requires a delicate balance between adapting to changing market conditions while adhering to local laws.
Consider the Impact of Global Cyberattacks
The sophistication of cyberattacks continues to evolve, making threats unpredictable. Kevin Nolan, head of multinational at The Hartford, shares that cyber is a key concern in the multinational space. “As we’ve seen over the last few years, when these incidents occur, the effects tend to be widespread and global in nature.”
Bannell adds that the security and protection of an organization’s data and network infrastructure (regardless of industry) is one of the top (if not, the top) priority for corporate risk managers, c-suites and boards of directors. Massive investments have been made in hardening their networks. The loss of or the degradation of an organization’s network infrastructure and data is a major threat organizations large and small.
“Technology firms produce, transmit, hold and process tremendous amounts of data. Practically every aspect of human life is reliant upon “technology” and data. Unfortunately, this attracts threat actors who have long recognized the criticality and value of that data and look to exploit those systems' vulnerabilities for financial gain. It is a huge “industry” into and unto itself. Global and geopolitical conflict and uncertainty only increase this activity,” says Bannell.
Understanding the Unique Needs of Tech Companies
As most technology companies operate outside the United States, it is important to have the right protocols in place to fulfill their duty-of-care obligations in different markets. Technology companies and products are rarely ever limited or confined by geographic borders.
“Their growth has also far outpaced that of non-tech industries due to the proliferation and expansion of technology’s reach and application across the globe,” says Bannell. “There is also gigantic outside investment of capital into the industry, funding innovation and expansion that requires compliance and infrastructure oversight. Also, as more technology companies go private or are acquired by public companies, this prompts and warrants a much more robust compliance and due diligence approach to how data and networks are managed and protected.”
An important consideration for technology companies is managing the various legal jurisdictions and requirements for data security and privacy laws. Global regulators are targeting tech companies with more complex requirements and stringent enforcement. Now, companies must rethink their compliance strategy to address regulation at scale. Their previous approach of focused, dedicated action for specific regulatory issues will no longer work.2
To a degree, companies realize these regulatory changes lead to potential coverage gaps.
"Through research we have found most global businesses believe their company has international coverage gaps they should be addressing, while also acknowledging they plan to increase their foreign operations over the next few years3,” says Nolan.
Protect Your Tech Company as It Grows
Multinational insurance plays a pivotal role in safeguarding companies against emerging risks, ensuring they remain resilient in the face of disruptions while maintaining their momentum for growth. Regardless of where your tech business is in its growth cycle, insurance coverage is important.
“To protect technology companies against global exposures, they should look for a carrier with wide global reach, experience in the industry and a deep knowledge of how local regulations may impact their business,” says Nolan. “By purchasing global insurance on a coordinated basis, companies can achieve economies of scale with premium and ensure their coverage and claims handling is harmonized across the world. They’ll also benefit from centralized risk engineering and travel assistance services.”
1 “Top emerging risks in the technology sector,” Risk Leadership Network, November 2023.
2 “Big Reg Comes for Big Tech. Here’s How to Respond.,” Boston Consulting Group, January 2024.
3 The Hartford Internal Data, 2023
The information provided in these materials is intended to be general and advisory in nature. It shall not be considered legal advice. The Hartford does not warrant that the implementation of any view or recommendation contained herein will: (i) result in the elimination of any unsafe conditions at your business locations or with respect to your business operations; or (ii) be an appropriate legal or business practice. The Hartford assumes no responsibility for the control or correction of hazards or legal compliance with respect to your business practices, and the views and recommendations contained herein shall not constitute our undertaking, on your behalf or for the benefit of others, to determine or warrant that your business premises, locations or operations are safe or healthful, or are in compliance with any law, rule or regulation. Readers seeking to resolve specific safety, legal or business issues or concerns related to the information provided in these materials should consult their safety consultant, attorney or business advisors. All information and representations herein are as of November 2024.
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