Transportation industry executives say that the rising threat of cyber and data privacy breaches is the primary risk to their sector, a report found.
The report, called the
2016 Transportation Risk Index, was authored by Willis Towers Watson. About 350 senior executives working in the air, sea, rail and road-transport sectors were surveyed to paint a picture of the transportation industry’s risk environment. Respondents rated 50 risks for their potential to disrupt business and difficulty to manage over a 10-year horizon, as well as five broad megatrends.
Next to data breach risks, most respondents identified the failure of critical IT systems and dependence on third-party suppliers as the next leading risks to the industry. Third-party security vulnerabilities, competition law scrutiny associated with M&A activity, and the increased complexity of regulation take fourth, five, and sixth place, respectively.
“The transportation providers’ world is perpetually changing, so risk strategies need to be responsive and dynamic,” commented Willis Towers Watson head of Transportation Mark Hue-Williams. “Regulation and technological advances demand new opera¬ting models while, simult¬aneously, hostile actors mount attacks to undermine the industry’s role in the global economy. This is set against an unstable geopolitical and economic backdrop and ultracompetitive labor market. Knowing how these shifting forces should shape a company’s risk response is critically important as well as a great opportunity.”
In terms of megatrends, the geopolitical category barely took first place, with the digital one a close second, reflecting the impact of impact of world events on operations and profitability. Government actions, regulators and the judiciary—often reactions to such geopolitical trends—were found by the report to be just as disruptive.
With both physical and digital supply chains becoming more connected, the report suggests that risk resilience needs to be established at the community level.
“Understanding your risks and knowing how to respond provides a competitive advantage, which is why we believe risk is a path to growth,” said Hue-Williams. “We commissioned this research to help our clients unlock their potential.”
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