The results in this year's report highlight many of the evolving technology related risks facing organisations. Perhaps the key themes coming out of this report are:
- the tension between the need to manage current technology risk, whilst ensuring competitiveness with the timely adoption of new technology;
- the potential impact a more cautious approach to technology transformation might have on the adoption of new AI tools; and
- whether dispute resolution systems, generally, are fit for purpose for the evolving range of technology related disputes that are expected to arise.
Never mind the future, are you taking care of the present?
Responses to our 2024 survey point to a growing awareness that organisations need to know their current technology well. The sharp increase in concerns around current data management and data security driving the adoption of new technology in Section 1 (figure 3) points to this, as does the view that compliance/regulatory disputes remain the greatest source of disputes for organisations (figure 5). A tension here is driven by the growing regulation over technology across the world, be it data protection, operational resilience (for some regulated sectors) and the emergence of AI regulation.
Although regulatory/compliance disputes remain high, they have fallen in all regions bar Latin America (figure 7). This may point to the growing understanding of the need to take into account the regulatory risk in decision making over technology transformation. That may also explain two results in Section 3: the drop in confidence of senior executives' understanding of current technology (figure 13) and the lack of time/resources and skills/expertise to minimise technology risk (figure 15).
This paints a picture we have also observed, that organisations are running highly complex, legacy, technology systems. With migration to the cloud now mainstream, many opportunities exist for organisations to migrate away from legacy environments to newer, more stable (and potentially secure) cloud systems. In many cases, the complexity of legacy systems (otherwise in need of modernisation) drives the challenges to the adoption of new environments that meet the current standards of data and cyber security, and regulatory compliance are great. Substantial time and resource are being deployed in organisations to manage this, and executives are probably appreciating the challenges involved.
AI risks, but what risks?
The potential for AI to revolutionise the way organisations work remains, but the appreciation of risks with AI adoption is clear. What is far less clear is exactly where those risks will manifest. The relative even spread of risk factors identified in Section 2 (figure 10) highlights this well. That, as well as the regulatory framework that is evolving might result in slowing of the rate of adoption of AI at an enterprise level, as the risks of data migration and security, AI regulation and other operational risks will all have to be assessed and managed in great detail.
If not mediation: something else?
A key finding for this year is that the majority of respondents (57%) believe new forms of dispute resolution will be needed for disputes relating to new technologies. There is probably a great deal to unpack in that result, ranging from users’ (potentially negative) experience of current dispute resolution processes, which may be influencing their preference for new approaches, and the appreciation that as organisations digitise, it makes little sense to resolve disputes by analogue procedures.
Practitioners should also take note of the drop in the popularity of arbitration in EMEA (Section 4) against a growth of popularity of litigation in the region. Again, the factors here may be numerous. Some forms of arbitration have seen a hard time in recent years, with the EU's prohibitory approach to the use of arbitration for investor-state dispute resolution, and recent concerns around the presence of corruption in a small number of arbitrations. The technology sector has generally been more wary of arbitration than others, and that may now be influencing other sectors, with a sense that litigation may be a better (or less worse) option for technology disputes, given the perceived expertise in some courts and, of course, the appeal process in the event a first instance judge 'gets it wrong'. The report suggests this will be an area to watch in coming years as attitudes towards litigation and arbitration evolve, and new technology driven options become available.
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