Cyber and digital technology risks are a key concern for businesses and risk leaders, even as 60% see GenAI as an opportunity

Jakarta, 5 March 2024 – Cyber and digital technology risks are a key concern for businesses and risk leaders in 2023, even as 60% see GenAI as an opportunity for their businesses, according to PwC’s 2023 Global Risk Survey.

More than 3,900 business and risk leaders – from the boardroom and C-suite, and across tech, operations, finance, risk and audit – were surveyed in 2023, with the findings showing that 39% of respondents feel exposed to inflationary risks, cyber risks at 37%, followed by geopolitical conflict in third position at 33%.

Slightly different responses were given by the Indonesian respondents, where the top three threats in 2023 are inflation at 30%, cyber risk at 25%, and health risk and climate change each at 22%. This percentage indicates that Indonesia’s respondents are also exposed to climate change risk.  

Yuliana Sudjonno, Risk Assurance and Sustainability Leader, PwC Indonesia, said “Companies should start early in gathering data as well as harnessing the power of technology and tools to enhance effective risk management implementation to continuously improve and innovate. Furthermore, creating a strong positive risk culture and diverse multi-disciplinary capabilities across the organisation will be critical to turning risk into the enabler of change, growth and resilience.”

The survey also finds that as businesses look to new and emerging technologies such as GenAI, machine learning, automation, cybersecurity and the cloud to unlock value and transform their operations, it is also playing a significant role in shaping that organisation’s exposure to risk. 

Sam Samaratunga, Global and UK Head of Risk Services, PwC UK, said, “In a world that is persistently in a state of flux, it is clear that organisations need to transform, with new and emerging technologies playing a critical role in that transformation. So it is no surprise that cyber and digital risks are top-of-mind in 2023, with those leaders responsible for managing risk ranking cyber more highly than inflation. However, the survey highlights that if organisations don’t take risks, they will not progress. So if organisations are to grow, build resilience, and see sustained, long-term outcomes, they should follow the lead of ‘Risk Pioneers’ - organisations with a proactive approach to risk, an enterprise-wide risk strategy, and strong alignment on risk appetite between teams.”

GenAI is viewed as an opportunity, but is also triggering risk reviews 

Technological change is shifting the risk agenda inside businesses, with 57% of respondents noting that preparing for technology investments, from cloud to emerging technologies such as GenAI, is the single biggest trigger for an organisation to review its risk landscape. This is higher than organisations that are triggered into a review by a risk event (50%) or by entering new markets (46%). Technology disruptors – those that are more focused on value creation than value protection – are also much more likely to be seen as opportunities, rather than risks, compared to other external non-tech disruptors. For example, 60% see GenAI as an opportunity, compared to only 35% who see changes in regulation, or 28% who see supply chain disruption as an opportunity. 

Changes in perspective also occurred in Indonesia when 69% respondents agreed to technology investment, especially in availability of facilities like cloud immigration, emerging technology and data infrastructure. Next, 64% of respondents believe development of organisational strategy will help to tackle this risk. The other 50% of respondents saw the possibility of expanding to the new market as the opportunity to take.

Risk Pioneers are leading the way 

Risk Pioneers – a top performing group of organisations, comprising 5% of survey respondents and spread across all industries – are blazing a trail in reframing risk as a value creation opportunity. They are overwhelmingly (73% v 53% of those surveyed) likely to have an enterprise-wide technology strategy and roadmap; are 1.8 times more likely to say they are “very confident” in balancing growth and managing risk; 1.8 times more likely to see GenAI as fully an opportunity than a risk; and 1.6 times more likely to proactively take risks to create opportunities versus prioritising safe or low-risk strategies. They are also significantly more likely to upskill internal teams on risk-related capabilities and express greater alignment with their CEO/board on levels of risk appetite (32% matching that of their CEO and board, compared to 22% of overall respondents). 

An approach to risk led by a clear and authentic purpose can help organisations be more resilient and guide which risks to embrace or avoid. Purpose (Vision, Mission, and Strategic Initiative) provides a vital strategic lens on whether a risk is more of a threat or an opportunity, particularly around issues such as climate change, sustainability, ethical supply chains and the responsible use of emerging tech such as GenAI. 42% of Indonesia respondents say they strongly agree that their organisation uses purpose and vision for the future to make decisions about risk. This showed that Indonesian respondents had a good understanding of the technology risk in their organisation.

Closing the Gap 

While there is a clear ambition among most organisations to take a more tech-powered approach to risk, there is a clear gap in capabilities and execution when only one in ten (10%) are already using advanced and predictive analytics, cutting-edge tech, and data for managing risk, and are continuously refining and innovating. Furthermore, many sit at the initial and developing stages of tech/data maturity, with just 14% exploring or having just started using technology and data for risk management, as compared to Indonesia at 10%, whereas less than a quarter (24%) are using basic technology and data tools for risk management or have established technology and data procedures for risk management (in which Indonesia respondents show a slightly higher figure of 26%).