The report shows that cyber-resilience is under pressure, with generative artificial intelligence (GenAI) throwing into question existing data governance strategies.
Sixty-eight percent of telco respondents believe they are not doing enough to manage the unintended consequences of artificial intelligence (AI), and 74% say they need to do more to mitigate against “bad actors” who could use AI to support cyber attacks and other malicious activities. At the same time, 53% of telcos believe the cost to their organization of cyber breaches will exceed US$3 million in 2023, up from 40% in 2022.
The influence of AI also sees regulation climb on the 2024 risk radar – from 10th to ninth position. The report highlights that question marks surround the nature of future AI legislation, creating uncertainties for telcos. These pressures are heightened by a divergence in emerging policies between countries regarding the balance between AI guidelines and planned legislation. In the EU specifically, this has triggered concerns that AI could stifle innovation and limit international competitiveness.
“The evolving telecoms risk radar is indicative of how GenAI is reshaping industries by innovating processes and transforming the way we do business. In this landscape, revisiting data governance frameworks will be critical as businesses look to address emerging risks. This should be accompanied by adopting new approaches to decision-making and leadership interaction that builds consensus on fast-changing issues around cyber-resilience, data ethics, regulation and digital policies,” said Tom Loozen, EY Global Telecommunications Leader.
Insufficient talent and skills management is a new entrant to the Top 10, debuting in third position. Again, AI is an influencing factor. With new technology cycles in both GenAI and edge computing on the horizon, digital talent is increasingly in demand. In addition, a shortage of network engineers presents a more immediate challenge to the industry.
This trend is compounded by financial pressures, which are threatening the future talent pipeline. More than half (55%) of telecoms employers have introduced hiring freezes – almost double that recorded across all sectors (28%). And 61% of telcos say talent retention is being hampered by salary and benefits cuts as part of a cost-reduction drive – well above the sector average (44%).
Falling just one place to second position on the Top 10 shortlist, telcos’ response to consumers during the cost-of-living crisis remains a pressing risk for 2024. While only 16% of consumers are actively reducing their spend on fixed and mobile connectivity, many are looking for better deals and advice – with 60% agreeing that the cost-of-living crisis has made them more likely to shop around for the best deals. Indeed, the proportion of households going to price comparison sites or friends and family for recommendations has climbed from 19% last year to 30% in 2023.[6]
The Top 10 risks included in the 2024 report are:
1. Underestimating changing imperatives in privacy, security and trust
2. Insufficient response to customers during the cost-of-living crisis
3. Inadequate talent and skills management
4. Poor management of the sustainability agenda
5. Failure to take advantage of new business models
6. Inadequate network quality and value proposition
7. Failure to improve workforce culture and ways of working
8. Ineffective engagement with external ecosystems
9. Inability to adapt to the changing regulatory landscape
10.Failure to maximize value of infrastructure assets