Embroker’s 2024 Tech Company Risk Index: AI, Staffing, and Less Cyber Risk?

The ever-changing tech landscape has put the new kid front and center: AI. As companies navigate its implementation (and implications), they encounter a new problem — balancing its enormous benefits and equally weighty risks. However, not everyone is looking forward to the future of AI: artificial intelligence is often made a scapegoat for replacing workers amidst continuing layoffs in the technology sector.

Embroker commissioned a survey of more than 200 tech companies, revealing a more than complex and often confusing landscape. On one hand, these companies recognize AI’s potential; but, on the other, they are acutely aware of the risks, notwithstanding security breaches and human error. Despite these concerns, tech companies are pushing forward with AI adoption, relying heavily on risk mitigation strategies to manage potential downsides.

2024 Tech Company Risk Index is here

AI, staffing, the economy, and more. Find out what your industry is dealing with, and what you can to do mitigate your risks.

Learn More

The Meteoric Rise of AI Lands in Tech’s Backyard

The rise of AI has prompted many companies to explore its capabilities. Tech companies, being early adopters, are leading the charge with 69% using AI for various applications. How? Improving the customer experience, demystifying their data and generating website content.

• Customer service automation (46%)
• Data analysis (45%)
• Web content creation (40%)

Adoption does not always mean acceptance however —  79% of tech companies expressed concerns about using AI-driven tools. Many cite potential over-reliance, cyber attacks, and data privacy issues. These concerns may possibly be misplaced as many tech professionals struggled to retain their jobs in 2024:

• 41% are concerned about over-reliance
• 42% are worried about data privacy
• 30% fear security vulnerabilities

Despite economic woes, a pending presidential election and AI’s ever-increasing ability to fool even the most tech savvy person, tech companies’ fear of cyber attacks has decreased significantly from 2023 to 2024. Previously a top concern, it failed to break the top five in 2024, and only a small percentage reported experiencing breaches, despite a historic rise in breaches in general. This confidence is truncated by few using AI to improve their risk profile:

• Only 23% of tech companies experienced a cyber attack in the past year
• Only 16% plan on using AI tools to mitigate data and cyber risks

Hang up the Patagonia Vest — Tech Bros are Struggling

General security concerns aside, tech companies report focusing on hiring and retention despite reports of enormous layoffs in the sector. Many companies are optimistic about the future due to promising financial performance, potential market growth, and new product offerings. This optimism contrasts sharply with reality: tech experienced more than 90,000 layoffs as of August 2024:

• 82% of tech companies are optimistic about the future, citing:
  • Promising financial performance in H1 (52%)
  • Potential market growth (49%)
  • A new product offering (49%)
• 39% are prioritizing hiring and retention

Just Like You and Me, Tech Companies May Not Have Enough Cash

Layoffs highlight the industry’s ongoing, significant cash flow concerns driven by rising costs of business, inflation and interest rates. Despite these reductions, few companies are prioritizing fundraising this year:

• 59% report struggling with rising costs due to:
  • Inflation (54%)
  • Rising interest rates (37%)
• Only 20% are prioritizing fundraising in 2024
  • A mere 9% are optimistic about new funding opportunities

These financial woes are expected to persist, with ongoing fears about inflation and interest rates, which have increased since 2023. As tech companies forge ahead with AI, they must navigate a complex landscape rife with risk and reward. Optimism for the future is tempered with significant concerns about security, financial stability, and the well-being of their workforce. 

Perhaps the most critical element of risk management is robust cyber insurance. Close to a third of tech companies DO NOT believe their current policies would fully (or even partially) cover them in the event of a breach. This lack of confidence in cyber insurance proves a need for an improved insurance safety net.

For more insights into the evolving risks in tech, check out the Embroker Resource Hub.

Get the full report below.

2024 Tech Company Risk Index is here

AI, staffing, the economy, and more. Find out what your industry is dealing with, and what you can to do mitigate your risks.

Learn More