Legal and regulatory risks dominate North American TMT

Technology, media and telecommunications (TMT) firms in North America are no strangers to legal or regulatory challenges. But in our latest TMT Risk Index, the importance attached by business leaders to these risks stands out as exceptional.

We asked senior executives to rank the various challenges they faced. The results are  divided into a number of “megatrends.”  For North America, six out of the top ten risks cited are found within regulation and legal risk.

Legislation rules, OK?

North American TMT companies rank their top risks

  1. Consumer and product legislation and lawsuits
  2. Data protection fines and penalties
  3. Encroaching price regulation
  4. Reputational risks from human and environmental issues
  5. Intellectual property breaches

Across the sector as whole, consumer and product legislation and lawsuits was ranked as the top risk, followed by data protection fines and penalties. Firms also cited encroaching price regulation, reputational risks from human and environmental issues, and intellectual property breaches as making up the top-five risks.

Among North American telecom firms, consumer and product legislation and lawsuits again ranked the highest. For technology firms it was data protection fines and penalties, while media companies saw the greatest threats coming from emerging competition.

The challenge for regulators is to keep up with events in the business world. This is especially the case in North America. While the region is home to many of the TMT sector’s most powerful businesses, it also boasts a plentiful supply of start-ups dedicated to creating new products and services. Often, the innovative business models of these new operators can push the boundaries of established regulation.

Transforming industries

The way TMT is increasingly affecting other industries, such as aviation, automotive, transportation and hospitality, is also a factor. Technology is creating new competition, as well as allowing existing firms to do business in new ways. This can create new risks, not just in areas such as data protection, but also in compliance with industry-specific regulations.

The challenge for firms is to reduce the regulatory impact on their businesses. TMT firms need to be as good at engineering risk as they are at engineering products.

Doing so means being fully aware of the risks from legislation and regulation, and perhaps even anticipating the way regulators and lawmakers might react to a new business idea, as well as to broader issues such as privacy concerns or cybersecurity.

This requires companies to take a multidisciplinary approach: working with technology, R&D, human resources and, above all, the legal team to stay compliant – and also to stay ahead.

About Tom Srail

Tom Srail is Regional Industry Leader for Willis' Technology, Media and Telecommunications practice, based in Medin…
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