Economic nationalism and regulation critical risks for TMT sectors, Willis warns

Economic nationalism and creeping EU regulation are the cause of increasing concern amongst companies in the technology, media and telecommunication sectors, according to a whitepaper published today by Willis Towers Watson.

The risk advisory is warning companies operating in these sectors to be mindful of the potentially lasting impact of these two major geopolitical risk developments on supply chains and IP.

The whitepaper, developed with analysts from Oxford Analytica and based on in-depth interviews with risk management professionals in leading technology companies, also highlights political uses and abuses of technology and political aftershocks of COVID-19 as risk factors.

It also outlines how regulatory restrictions may lead to costly shifts in value chains with examples including data localisation requirements implemented by public authorities that restrict the collection, storage and accessibility of personal, government and other types of data; and measures to restrict applications of machine learning and other forms of artificial intelligence.

Laura Burns, US political risk product leader, financial solutions, Willis Towers Watson, said, “If data is the new oil, as the saying goes, might Big Tech be the new Big Oil? Today, it appears that competition for dominance in high technology may become central to geostrategic competition, just as oil did from the 1850s to present. And as these Big Tech companies operate, increasingly they may collide with the geopolitical objectives of host countries and home countries. The technology sector will continue to develop and adapt but its ability to work in a volatile business environment is critical, as the last year has shown."

Trade wars and rising populist politics have in recent years contributed to the emergence of economic nationalism. Individual countries’ responses to the global coronavirus pandemic could be said to have advanced the trend. See the next issue of CIR Magazine for more on this topic.

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