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Publication 26 Nov 2024 · International

Section 1 – Perception and reality of technology risks

8 min read
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A change in the drivers for adoption of business-critical technologies?

In 2022, the leading driver of business-critical technology adoption cited by survey respondents was access to emerging technologies such as AI, with 37% of respondents ranking it in their top three drivers. Notwithstanding the continued growth of AI, only 34% of respondents to the 2024 survey placed this in their top three reasons for adopting business-critical technology, ranking it in fourth place.

Instead, in 2024 respondents cited the importance of data management and security as the key reason for adopting business critical technology, with 41% placing it in their top three drivers (jumping to 50% of respondents in APAC), compared to 23% in 2022 (and 22% in APAC). This is not surprising. In 2022, 69% of respondents had adopted (and 30% planned to adopt) tabletop exercises to simulate a cyber breach as part of incident response planning and 54% had adopted (and 46% planned to adopt) an incident response plan to manage breaches. Further, 33% of 2024 respondents cited cyber or other data security disputes in their top three causes of disputes during the past three years, ranking it in third place. This prevalence of cyber and data security disputes and the impact such an incident can have on a business, will likely underlay the drive to acquire new technology to facilitate data security.

Q: From the perspective of your role, what are the principal drivers in the adoption of business-critical technology? Answers ranked in the top 3.

Regulatory requirements have also increased as a driver for the adoption of business-critical technology from 31% in 2022 to 36% in 2024, putting it in third place behind data security and customer demands. Again, this is not surprising given that 42% of respondents in 2022 and 35% of 2024 respondents placed compliance and regulatory disputes in their top three sources of technology dispute over the past three years.

The survey results suggest an increase in both supplier and customer demands as a driver for technology adoption. Supplier demands have surged, rising from last place in 2022 (19% ranking it in their top three drivers) to fifth position in 2024 (31%). This increase is especially prominent in both the Financial Services and Consumer & Retail sectors, which have seen a rise from 15% to 41% and 17% to 37% respectively. Respondents also note the increasing importance of customer demands, with 37% identifying them in their top three drivers for technology adoption, up 4% since 2022.

Business efficiencies and the need to replace outdated legacy systems have decreased significantly, falling from 30% in 2022 to 23% in 2024. This perhaps suggests that adoption of technologies over the last two years has to some extent addressed business concerns about the age and suitability of their technology estate.

The increase in the prominence of supplier and customer demands, and the reduction in the need to replace legacy systems, may also indicate an increase in the impact of external market forces on driving change within organisations.  In competitive markets, suppliers and (particularly) customers can indirectly influence a business approach to technology adoption, and consequent risk.  This will particularly apply where organisations are looking to standardise and automate their business operations to save cost and remain competitive.

One clear change in the drivers for technology adoption is M&A. Two years ago, M&A was the third most important driver, but it has now dropped to the bottom of the list, mirroring a significant decrease in M&A activities.

Concern over emerging technology risks has persisted

It is clear from the survey that whilst the drivers for the adoption of business-critical technology may have changed, concerns over the risks posed by such technologies have increased.

In 2022, 56% of respondents expected disputes relating to AI to increase in the next three years, and 52% said the same about crypto. In 2024, 59% and 55% of respondents respectively expected disputes in these areas to increase (representing the second and third most cited issues where respondents expected an increase in disputes). In fact, the number of respondents expecting to see an increase in technology-related disputes has risen in all areas save for smart contracts. This arguably demonstrates an increased awareness amongst respondents of the risks and potential sources of dispute posed by new technologies. 

The 4% decrease in relation to smart contracts may reflect the fact that uptake in the use of smart contracts has not been as widespread as expected. In addition, what falls within the definition of a smart contract is not concrete, potentially resulting in respondents being unsure how to classify the subject matter of those disputes.

Q: Do you expect to see an increase in technology-related disputes in the following areas for your organisation over the next three years?

Whilst, as noted above, respondents to the 2022 survey expected AI and crypto disputes to increase during the period 2022 to 2025, in fact the 2024 survey results do not indicate any significant change in the actual number of disputes in these areas. Only 27% of respondents ranked AI among their top three sources of disputes in the past three years, down from 30% in 2022. For crypto disputes, this figure is effectively flat at 20% compared to 22% in 2022. It is unclear whether this is due to the fact that there has not been sufficient time between the surveys for these disputes to develop, or if in fact respondents are overestimating the expected numbers of disputes in these areas.

Q: Please rank the primary sources of technology-related disputes for your organisation over the last three years. Answers ranked in the top 3.

Crypto disputes are more prevalent for respondents located in US and Canada, where 28% ranked crypto in their top three sources of disputes in the past three years (compared to 14% EMEA and 15% APAC respondents). This is an 8% increase from 2022. Whether this increase will occur in other regions is to be seen; however, it may suggest that respondents in other regions are right to expect an increase in crypto disputes during the next three years.  

Q: Please rank the primary sources of technology-related disputes for your organisation over the last three years. Percentage of responses ranking “Disputes arising from use of crypto currencies” in top 3.

Compliance and regulatory issues, particularly with the introduction of new regulations in cybersecurity, artificial intelligence, crypto-assets and data protection, remain critical in Latin America. These issues, once lacking robust regulation, now present significant challenges for companies. The evolving legal landscape requires businesses to navigate complex rules and ensure adherence to new standards. In this context, companies must take a leading role in interpreting these regulations, especially as authorities may lack experience or familiarity with these issues. This can lead to overly conservative or inadequate interpretations of the regulations. Therefore, businesses must be proactive in shaping and clarifying regulatory expectations, as incorrect scrutiny by authorities could pose additional challenges.

Carolina Veas
Carolina Veas, Partner, Competition

Compliance and regulatory issues remain the most frequent area of dispute. Whilst the number of respondents placing it in their top three sources of disputes has declined (from 42% in 2022 to 35% in 2024), it continues to score highly across all geographic regions and was the greatest source of disputes for companies based in LATAM (38%) and in North America (37%). 

This prevalence of compliance and regulatory disputes was not anticipated by survey respondents in 2022. Only 14% expected to see an increase and 76% anticipated a reduction. These numbers have remained surprisingly static in the 2024 survey results, notwithstanding the fact that regulatory and compliance issues are cited as the most common area of dispute for the past three years.

There is little variation between sectors, notwithstanding the increased regulation and compliance experienced in the Financial Services and Life Sciences sectors.

Q: Please rank the primary sources of technology-related disputes for your organisation over the last three years. Percentage of responses ranking “Compliance/regulatory disputes” in top 3.

A total of 34% of respondents placed IP and business secrets disputes in their top three sources of disputes over the past three years, making this the second most cited source of disputes. It was the greatest source of disputes for respondents based in APAC, with 40% of respondents placing it in their top three. It is also the area in which most respondents expect to see an increase – 66% expecting an increase in such disputes over the next three years (rising to 77% of respondents in APAC, 73% from the Energy sector and 72% from the Life Sciences & Healthcare sector).

Whilst survey respondents were not asked to specify the area in which they anticipated IP disputes to arise, as we explore further in section 2 of this report, 69% indicated they expect an increase in disputes relating to third-party violation of IP rights by training/use of AI in the next three years.

Q: Please rank the primary sources of technology-related disputes for your organisation over the last three years. Percentage of responses ranking “Intellectual property disputes and breach of business secrets” in top 3.

Cyber and other data security disputes were placed in the top three causes of disputes by 33% of respondents (up from 27% in 2022), making this the third most cited source of disputes. Interestingly, whilst 28% of respondents in EMEA ranked cyber breaches or other data security disputes in their top three sources, that number decreases to 21% when considering only European based respondents.

Q: Please rank the primary sources of technology-related disputes for your organisation over the last three years.Percentage of responses ranking “Cyber breach or other data security disputes” in top 3.

Looking forward to the next three years, 35% of respondents indicated that they expect cyber or other data security disputes to significantly decrease (with as many as 80% of respondents in the Consumer & Retail sector expecting some level of decrease). In circumstances where cyber and data breaches are the fastest-growing sources of disputes (up 6% and 4% respectively compared to 2022 survey results) and data management and security was ranked as the top driver of technology adoption, it will be interesting to see whether the data security technologies deployed result in the anticipated decrease in cyber and data security disputes, or if the hopes placed in such technologies are unfounded.

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1 Key findings

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3 Section 2 – AI risks in focus