Over the past several years, catastrophic risk from extreme weather, driven by climate change, has drawn much attention from activists, the media, governments, and an increasing number of business leaders. Less attention has been paid to another potentially catastrophic risk: the failure of technology to perform. In a global, digitally interconnected economy, such a failure can have devastating consequences.
Were technology and digital infrastructure to fail catastrophically — either through intentional attacks or errors — global commerce could grind to a halt. Data would be lost, or rendered inaccessible. Systems would fail to communicate. Critical infrastructure such as power plants, hospitals, and airports could be shut down. In every sense, massive technology failure could be catastrophic.
When technology fails even on a lesser scale, it potentially creates a range of first-party exposures for technology companies alongside numerous liability risks for companies that use technology. These exposures go beyond data breach and technology errors and omissions. They could include bodily injury and property damage if, for example, a tech failure led to an autonomous vehicle crash or an industrial accident.
Marsh’s 2020 Technology Industry Risk Study explores a new definition of catastrophic risks: The greatest catastrophic risks for technology companies and technology-enabled businesses are not natural disasters. They are technology and data infrastructure failures.
For risks leaders at technology companies, the impact of technology catastrophes is already known. In a survey of more than 150 global risk leaders at technology companies, they ranked technology risks as three of the top four catastrophic risks facing their companies.
