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Leading UK technology firms place no emphasis on external business risks, says BDO

Antony Savvas

The UK's largest technology businesses are living dangerously if they continue to focus only on internal risks, according to consultant BDO Stoy Hayward.

A BDO analysis of the annual reports of the UK's top 50 technology companies identified that directors were placing a stronger emphasis on internal risks instead of focusing on external risks.

When identifying their key risks, the UK's largest technology companies highlighted internal issues such as talent management (60%) and innovation/development of new products/services (58%) as the most common risks they are seeking to tackle.

However, said BDO, these are all very inward-looking risks and fail to take into account potentially significant external issues, such as reliance on key markets (22%), protection from hackers (14%), data integrity (14%) and infrastructure risks (11%), all of which fell far further down the list.

Julian Frost, head of technology at BDO Stoy Hayward, said, "We were very surprised at the limited external focus displayed by the UK's largest technology companies.

"Internalising can cause companies to miss the most obvious external risks as well as opportunities. This is particularly important given the current tough economic environment."

He said, "We were very surprised that only 14% of the largest technology companies are highlighting the importance of ensuring the integrity of their data/intellectual property or protecting themselves from hackers. These are highly important areas, especially as we see the issue of data integrity appearing on a weekly basis in the media."

In addition, the research highlighted that global economic conditions and interest rate risks came in at a lowly 22% and 14% respectively. However, even more surprising, said BDO, was that just 10% considered risks associated with international operations a priority.

"I suspect that some companies are currently regretting not having prepared for the risks arising from global economic conditions or interest rate risks. In fact, a focus on these areas in recent years would actually present an organisation with a number of great opportunities now," said Frost.

The research also compared the UK's results with the top 100 technology companies in the US, and found a similar lack of focus on external risks.

Infrastructure risks, reliance on key markets, interest rate risks and data integrity risks all failed to even make the list of top 20 factors in the US, unlike in the UK at least.


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