Regulations Are Creating Confusion And Uncertainty
Technology companies are facing a great deal of uncertainty right now and putting risk management decisions on hold. The world’s largest technology companies are facing the most aggressive regulatory climate since their inception. Large state agencies are exacting multibillion-dollar fines, sending shockwaves through the industry. All of the major players seem to be in the spotlight, with issues focused on data privacy.
No Standard Framework For Assessing Data
Recently, California passed the California Consumer Privacy Act (CCPA), which was enacted on January 1, 2020. It is one of the most comprehensive data protection statutes, following closely with General Data Protection Regulation. The law is designed to give consumers more insights and rights regarding how technology companies collect and use their data. According to a recent article on Advisen’s news page, the law is creating more confusion than standard. For example, two large companies with the same business are not required to use the same standard information for their consumers. One company may offer privacy controls around credit card use and another may offer controls around location. The companies can also retain information not disclosed in the CCPA. This is raising a red flag here at Gallagher as any breaches in this law in the upcoming years will have a precedent-setting effect if it gets through the judicial system.
Adjusting Cyber Coverage To Account For New Regulations And Data Storage
It is not uncommon for companies to buy separate polices to protect against their business practices, but this is a brave new world of regulations. Companies that bought general liability policies with a cyber component years ago may not have enough limits on their insurance policies for today’s environment. A company that bought a stand-alone cyber policy just three years ago may not have adequate coverage for a cybercrime today. A recent article in The Wall Street Journal highlighted comments from a social media company executive that suggested that data is not simply a commodity—it is much more complicated than that. They view data as something that can both be kept and shared. These disparate views are among the leading causes of confusion for technology companies and regulators.
With the rollout of 5G services, these issues will only continue to raise concerns in C-suites. The potential of an always-on, high-speed, low-latency connection promises to connect and transfer data in real time. According to an article in Reuters, the U.S. Department of Commerce has already blacklisted a major Chinese telecommunications equipment provider for use in U.S. telecommunications networks, while the FCC barred all major Chinese equipment companies from selling to rural carriers under the premise that they pose a national security risk.
Start-Ups Struggle With Cash To Keep Up With Innovation
This regulatory landscape is very troubling for start-ups, and only major companies flush with cash can innovate. Looking forward, there is concern that large companies will slow their appetite for innovation as the legal landscape becomes restricted. Major cloud service providers are currently experimenting with quantum computing services. Quantum computing services can sort through vast amounts of data in real time and come up with multiple scenarios to help end users choose the most optimal solutions. According to The Wall Street Journal, it can help manufacturers speed up materials science research and help transportation companies find more efficient routes for deliveries in real time. The greater issue here is only the biggest and richest companies can offer these services.
Evolving With The Industry
We are very excited about the new and emerging technologies coming in the future. We have had quite a few lessons in history about how regulations can stifle innovation. At Gallagher, we continue to monitor the developing landscape of regulations. Our tech practice is mindful of how dynamic these regulations are. We are constantly evolving in real time to work with carriers to add enhancements and endorsements to protect our companies with the broadest coverage.
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