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Press release
30 Nov 2023
|
London, GB
The emergence of GenAI is reshaping the 2024 telecoms risk radar
- Security concerns top telecoms risk ranking, accelerated by rise of generative AI
- Talent is a new Top 10 risk amid financial pressure and urgency for digital skills
- Response to consumers during cost-of-living crisis remains a pressing risk
Changing imperatives in privacy, security and trust emerges as the top risk facing telecoms companies in 2024. According to the annual EY report, Top 10 risks in telecommunications, 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.1 At the same time, 53% of telcos believe the cost to their organization of cyber breaches will exceed US$3m in 2023, up from 40% in 2022.2
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.3
Tom Loozen, EY Global Telecommunications Leader, says:
“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.”
The drive to attract and retain talent
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.4
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%).5
Adrian Baschnonga, EY Global Technology, Media & Entertainment and Telecommunications (TMT) Lead Analyst, says:
“Budget constraints are limiting the pursuit of critical skills and talent. Telcos must take steps to strengthen their existing workforce with a deeper focus on learning, upskilling and reskilling. Engaging with employees in new ways is vital, not only to build new software-led capabilities, but to create more successful connections with customers and stakeholders through renewed organizational purpose.”
Consumers want a better deal
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
Loozen says: “Rearticulating the customer promise, along with simplifying value propositions, will help sustain and grow telcos’ relevance to their customers, thereby unlocking new routes to creating long-term value.”
The Top 10 risks included in the 2024 report are:
- Underestimating changing imperatives in privacy, security and trust
- Insufficient response to customers during the cost-of-living crisis
- Inadequate talent and skills management
- Poor management of the sustainability agenda
- Failure to take advantage of new business models
- Inadequate network quality and value proposition
- Failure to improve workforce culture and ways of working
- Ineffective engagement with external ecosystems
- Inability to adapt to the changing regulatory landscape
- Failure to maximize value of infrastructure assets
-ends-
Notes to editors
About EY
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EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit ey.com.
This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.
About the report
Top 10 risks in telecommunications 2024 is part of an ongoing series of reports designed to pinpoint the most critical risks facing the telecommunications sector. Analysis draws on the EY sector research program by leveraging insights from EY industry and consumer surveys and harnessing them with the evolving perspectives of sector practitioners. The findings are categorized using the EY risk radar, which organizes risk factors into four domains:
- Compliance threats that originate in politics, regulations or corporate governance
- Operational threats that impact the processes, systems, people, and the overall value chain of the business
- Strategic threats that are related to customers, competitors and investors
- Financial threats that stem from volatility in markets, ecosystems and investments
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