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Many multinational insurers are studying the impact of digital fragmentation on their businesses. Now, they must move swiftly to counter its effects.
Many multinational corporations are searching for ways to counter the effects of digital fragmentation. They recognize that the rise in restrictions to global trade and business is hindering the efficiency and effectiveness of their digital resources. Consequently, it’s threatening the health of their businesses.
Eighty percent of the multinational companies we surveyed report that their directors have discussed barriers to globalization. Many of these companies are drawing up strategic plans to combat this threat. They’ve begun third-party audits, stress tests, risk assessments and contingency reviews. Issues under discussion include where to locate cyber-security capabilities, how to quickly respond to new legislation and the best ways to help shape further legislation.More than 20 percent of the companies we canvassed already hold strategic planning sessions dedicated to the impact of rising national trade and business barriers. Furthermore, 69 percent of companies are using scenario planning and stress-testing exercises to assess the effects of these obstacles.
Such initiatives are essential. They help companies adapt to the changing, often unpredictable demands of global business. However, it’s critical that the plans that emerge from these exercises are put into action. This is where some companies falter.
We’ve identified four key steps that will help executives at multinationals implement effective strategies to combat digital fragmentation.
Add a new lens to strategic planning: Evaluate strategic planning techniques currently in use. Determine whether they can accommodate the threats posed by the increase in barriers to international business. Key issues to consider include the spread of the company’s geographic footprint, the allocation of investments across different countries, the distribution of global services and IT facilities, and whether to remain in uncongenial markets.
Map and de-risk data flows: It’s vital that business leaders have access to accurate, relevant and timeous information. Potential threats to the flow of information, caused by rising international barriers, must be identified. Measures to manage these risks should then be implemented. A key concern is likely to be the effect of cross-border regulations on business models and growth plans. Companies may need to reassess how and where they store critical data to ensure that compliance to local regulations does not compromise key business activities.
Build local advantage: Digital fragmentation is a further incentive for multinationals to invest in the countries in which they operate. It’s important for global companies to strike the right balance between centralization and local investment. They can increase their participation in the economies of key markets by supporting the development of local talent, building stronger ties with nearby technology partners and working more closely with national policy-makers and regulators to guide future legislation.
Use technology as part of the solution: Emerging technologies can help companies counter many of the effects of digital fragmentation. Evaluate the potential of technologies such as artificial intelligence and blockchain to provide solutions that overcome the drawbacks caused by rising international barriers to business. Artificial intelligence, for example, could help companies overcome restrictions on the migration of talent by automating specialized tasks or helping local workers perform complex activities. Blockchain could enable companies to address data protection and cyber-security risks by providing them with more secure, decentralized and distributed information and transaction systems.
For further information about digital fragmentation and ways to counter its effects, take a look at this link. I’m sure you’ll find it useful.