Hogan Lovells: 91% of global businesses face IT compliance risk, but two thirds not taking sufficient action

Every business is innovating with technology to get a competitive advantage – but doing so creates more challenges and risks for organizations.

To explore the business risk landscape, $2.7 billion global law firm Hogan Lovells surveyed 1,500 business leaders across the world.

Hogan Lovells’ ‘The New Riskonomy’ report found that nine in ten companies face moderate to high levels of technology risk.

Despite this and only 4% saying they don’t believe changes in the tech landscape pose challenges or threats to their organizations, a whopping six in ten admit not taking a positive, proactive approach to tackle this tech risk.

The top four organizational vulnerabilities, according to Hogan Lovells, are data management, cybersecurity, the digital skills gap and misuse of generative AI.

The last two risks are highly linked, according to Michelle Roberts Gonzales, Partner, Hogan Lovells, Employment and Investigations.

In an exclusive interview, she tells UNLEASH: “In most organizations, digital skills have always been important, but technological advancement and the explosion of generative AI across the workforce have only made it more critical.”

For Hogan Lovells, these top four internal risks are very concerning for organizations. This finding means that while there are significant external risks, like a challenging geopolitical and economic landscape, it is time for organizations to stop making excuses and instead focus on getting their own house in order.

The question that remains is what is HR’s role to mitigating tech risks in their organization?

HR, tech risk and digital skills

Hogan Lovells’ report warns organizations not to be scared of technology because of the risks it posts – emerging tech like generative AI has the potential to transform the world of business (and work) for the better.

However, it is important that businesses keep people in the loop – the report stated: “Despite the technological focus of the new riskonomy, businesses still depend on people.

“People continue to play a strategic role in organizational growth, even amidst rapid technological change.”

While digital upskilling may be a major risk for organizations, Roberts Gonzales tells UNLEASH that “a lack of digital skills enhances the risk across a business’s operations”.

Organizations that don’t consistently consider and invest in digital skills in their overall business strategy will be left behind by competitors that have more nimble and skilled workforces.”

She continues: “For example, an employee who lacks digital skills is less likely to understand how their behavior can subject the company to a cyber security attack or critically think about the limits of generative AI.

“Under skilled workers may also slow the effectiveness of any new digital tools deployed, so there’s the risk that even a company that is willing to take bold steps toward improving or growing its technology will be unable to get the full benefits because its workforce won’t be ready.”

Therefore, HR needs to be ready to step up around upskilling and reskilling the workforce. The first step is “identifying the crucial digital skill gaps needed to drive their organization’s business strategy forward”.

To do this, Roberts Gonzales says: “The HR function needs to work closely with management and IT departments to anticipate the digital skills needed to achieve its strategic goals alongside its digital transformation strategy.

“Beyond conducting skill gap analyses and strategic learning & development programs, HR must also think proactively about recruitment & retention in order to compete in the war for talent in a digital age.”