- Security up from fifth to second place on Top 10 ranking of telecoms risks
- Sustainability is a new top-five entrant, now identified as a strategic priority
- Infrastructure reach and resilience remains No. 1 risk as network quality focus sharpens
Shifting consumer sentiment around data usage and digital well-being, combined with more frequent cyber attacks, sees changing imperatives in privacy, security and trust climb from fifth to second place in Top 10 risks in telecommunications 2021. The annual EY report ranks the most urgent threats facing telcos based on analysis of EY industry and consumer surveys.
With demand for connectivity services ever-growing, 75% of operators report an increase in cyber attacks over the last year, while 47% have never been more concerned about their ability to manage cyber threats.
Meanwhile, the Top 10 report sees a new risk emerge at the fifth position: poor management of the sustainability agenda. This is again driven in part by consumer attitudes to environmental, social and governance (ESG) disclosures, with 79% of UK consumers expecting companies to do more to ensure suppliers follow sustainable or ethical practices.
“Although the telecommunications industry is not the primary source when it comes to the CO2 emissions released into the atmosphere or the quantity of waste generated, telecom companies still have to focus on reducing their environmental footprint and making their operations, products and services more sustainable. For instance, telecom companies can generate significant amount of electronic waste, which can contain heavy metals such as lead, mercury and cadmium, that can pollute the environment if handled poorly. Furthermore, these heavy metals are difficult to source. For addressing these problems, circularity practices are essential, from trade-in and buyback programmes to programs that aim to repair, resell and refurbish old electronics. Another challenge is the growing energy consumption, which results not only in higher costs, but also a bigger carbon footprint. Green power purchasing agreements can represent a step in the right direction” says Laura Ciobanu (photo), Manager, Climate Change and Sustainability, EY Romania.
This issue is also climbing the boardroom agenda. Seventy-four percent of technology, media and entertainment, and telecoms (TMT) CEOs now expect companies to proactively take responsibility for the social and environmental impacts of their operations.
“The most notable thing is that telecom industry can enable sustainability across other sectors, as digitalisation will play a pivotal role in achieving the goal of net zero emissions by 2050. By offering worldwide connectedness at the push of a button, telecommunication has transformed the way we interact. The amount of emissions avoided through telecom-enabled technologies is multiple times higher than this industry’s own emissions. Energy-saving devices, IoT sensors, smart apps and even remote work are examples of this, while transportation can be another great example of telecoms playing a significant role in reducing global carbon emissions”, says Massimo Bettanin, Partner, Climate Change and Sustainability, EY Romania.
Mandate to improve network performance remains No. 1 risk
For the second consecutive year, failure to deliver infrastructure reach and resilience remains the top industry risk. With customers more focused than ever on connectivity in response to the COVID-19 pandemic, improving network coverage and quality continues to loom as the biggest issue facing telcos. Notably, 37% of consumers across Europe and North America say that the fastest broadband speeds are unavailable in their area, while the economics of network rollout in remote areas makes it challenging to meet policymakers’ ambitions to build a digital society.
Separately, the inability to scale internal digitization initiatives has fallen from second to sixth position on the ranking. The report highlights that the COVID-19 pandemic compelled many telcos to accelerate their digital transformation plans, and TMT CEOs are going further to deliver new transformation initiatives and investments. However, risks remain, as multiple transformation programs vie for boardroom attention and challenges around customer acceptance of digital tools persist. Indeed, 54% of consumers globally say that they still favor traditional call centers for broadband queries.
“While we see common risks maintaining at important levels on the radar, our study revealed privacy, security and trust rising in importance. Pandemic situation and increased cyber-attacks made consumers more concerned about data privacy and security now than ever before”, says Carmen Adamescu, Partner, Consulting, Government & Public Sector Leader, Head of Technology Transformation, Solution Delivery and Cybersecurity, EY România.
Health crisis continues to challenge supply chains
Debuting at fourth position on the risk radar is the failure to mitigate supply chain disruption. The report notes that the pandemic has put network and customer premise equipment (CPE) supply chains under unprecedented strain, with lockdowns limiting the availability of engineers and higher demand contributing to the chipset crunch. Government restrictions on vendors deemed to be high risk are also continuing to disrupt long-term 5G deployment plans, while new technology cycles are disaggregating established supply chains.
The full 2021 Top 10 risks in telecoms are:
- Failure to ensure infrastructure reach and resilience
- Underestimating changing imperatives in privacy, security and trust
- Failure to redesign workforce structure and skill sets
- Failure to mitigate supply chain disruption
- Poor management of the sustainability agenda
- Inability to scale internal digitization initiatives
- Ineffective engagement with external ecosystems
- Failure to maximize value of infrastructure assets
- Failure to take advantage of new business models
- Inability to adapt to changing regulatory landscape
About the report
The Top 10 risks in telecommunications 2021 is part of an ongoing series of reports designed to pinpoint the most critical risks facing the telecommunications sector. The analysis draws on a sector research program, leveraging insights from EY industry and consumer surveys, and harnessing them with the evolving perspectives of sector practitioners. Risks are categorized using the EY risk radar, which organizes risk factors into four domains:
- Compliance threats: originating in politics, law regulation or corporate governance
- Operational threats: impacting the processes, systems, people and overall value chain of the business
- Strategic threats: relating to customers, competitors and investors
- Financial threats: stemming from volatility in markets, ecosystems and investments