turns adaptation, and customer demands for compliance prior to

turns out to be more
than recalls, warranty returns, rework, production disruptions, reengineering,
litigation, or fines. Poor compliance disrupts customer and supply chain
relationships and can lead to lawsuits and lost customers, market share, and
value.

Computer manufacturers
and distributors are subject to international, national, and, in the U.S.,
federal, state, and local environmental regulations. The swift pace of new
regulations, global regulatory adoption and adaptation, and customer demands
for compliance prior to regulatory deadlines make compliance challenging.
Nearly every electronics company uses some of the millions of parts and
components subject to laws in-use for discharge, and disposal of hazardous substances
or environmentally sensitive materials. The question is how best can an
organization comply with each country’s or state’s environmental regulations.
It is not uncommon, for material restrictions which apply in one region do not
apply in another.

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Lifetime of products
continues to shrink in the computer/technology sector as a result the race to
market has significantly intensified and failure to innovate or meet customer’s
needs pose as one of the significant risk to the industry.

A couple of examples of
innovation failures include: Firstly, failure of Samsung’s flagship product
‘Galaxy Note 7’ smart phone, where Samsung had to halt production of the device
following reports that ‘Galaxy Note 7′ phones spontaneously catches fire and or
explodes.  The phones were outright
banned on flights, and Samsung had to recall the entire product line. Second
example is the failure of consumer acceptance of HP’s flagship product
Touchpad. Touchpad looked very similar to Apple’s iPad, but with significantly less
features as it was using its own underlying operating system called WebOS. As
the device was running on WebOS, there were very less applications and features
that the WebOS could support unlike Android’s play-store or Apple’s app-store,
which are consumers’ favorite. Some would argue that HP’s decision to offer
both hardware and software, in order to be successful in the mobile market may
have simply backfired as result the product failed. Those pundits also
recommend that HP should have simply followed Google’s lead and either used
Android in the devices or licensed WebOS to other vendors, so vendors could build
customer friendly apps.

 

Less Addressed Risks

Although we mentioned
at a high level the critical risks which the industry is facing today, there
are some other risks which are not given the needed attention by the Computer
industry, but they do have significant business impacts when goes unaddressed.

Firstly, globalization
has outpaced many organization’s ability to manage the accompanying cultural
shifts and computer industry is no different. When companies go global and
employ local staff in foreign country, human resource policies need to be
adapted to reflect the cultural profile of local employees. It is increasingly
common to find corporate offices and data centers in countries halfway around
the world. However with this transition comes a number of challenges, like, travel,
language, and time zone differences are all issues that must be addressed. But by
far the greatest challenge will likely be overcoming the cultural differences and
changing the ‘us versus them’ mindset. Emotions run high for those who have
been affected by outsourcing. Salary differences between countries can lead to
resentment. Both are difficult ‘people problems’ to solve.

Another less addressed
risk by the industry is employee misconduct. Employee misconduct during
employment could include, dishonesty, unacceptable behavior with colleagues or
clients, or breach of company rules, or behavior outside work which brings
reputational damage to the organization. We can see that each scenario brings
reputational risk to an organization, both internally and externally, and can
potentially result in a financial damage to the business. The problem is exponentially
magnified if the business is in the public eye as a result of the conduct,
something now more common as a result of issues going viral on social media.

 

Recent Study on ERM in Computer Industry

 

AON
Plc.’s computer industry survey report1 shows
93 percent of Computer organizations over $1 billion have a formal risk
manager. It also shows more than 76 percent of the enterprises have a
structured Risk management department. The report mentions 31 percent of the
Computer companies have a Chief Risk Officer (CRO) heading the Risk management
department. In Figure 1.2 we see the work-force
strength of Risk Management Department present in various Computer
organizations. With the growing importance and visibility of risk management, organizations
are increasingly including risk related planning to its strategic plan. As we
can clearly see to succeed in today’s competitive and heavily regulated
business environment, companies will have to incorporate risk management into
all aspects of their operations. In Figure
1.3 we can see that 33 percent of the Computer companies indicated a
marginal or significant planned increase in risk management spend/resources
over the next 12 months. Only four percent of indicated they are planning for a
decrease in risk management spend.

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