The economic slowdown that has affected countries around the world as they were recovering from the impact of COVID-19 has threatened the tremendous growth experienced by the tech industry over recent years. Many hyper-growth companies are facing the prospect of stalled growth, and established companies are carefully reviewing and adjusting their expenses as they come to terms with record rates of inflation, hikes in interest rates and the potential of a global recession.
In this episode of the Risk in Context podcast, Tom Quigley and Larry Liu discuss the challenges and opportunities that technology companies are facing and how they are adapting to continue growing. This episode features additional discussions with Jackie Quintal, Jaymin Kim, and Sam Tiltman to discuss developments and risks in digital assets, the metaverse and autonomous mobility.
On risk challenges for tech companies in Asia:
We are seeing record low sales of smartphones and record low sales of PCs. This change in demand got amplified in the supply chain with a very heavy impact on our clients in Asia doing contract manufacturing for smartphone and PC brands. This is the so-called bullwhip effect on clients in Asia. … They are in a cost-containment mode, trying to reduce their OpEx. They are in the process of de-inventorying. Their capacity utilization is maybe only in a range of 50%, mainly enough to cover their fixed costs. — Larry Liu
On digital asset risk:
The volatility here, I think, is certainly more than in most established currencies. … It’s the question of whether the actual volatility is disclosed to and understood by consumers. … But then also thinking about it in the context of network interruption or system failure. Because prices are volatile, if systems are down even for a very short period of time, you could imagine that consumers may be out a substantive amount of money depending on how long their inability to buy or sell was restricted and how that tracks with the overall volatility during that same period of time. — Jackie Quintal
On metaverse-related risk:
Specifically there is uncertainty around who will be held responsible, in which jurisdictions, for the likes of civil and criminal claims that could arise from, for example, interactions that occur avatar-to-avatar on various metaverse platforms. — Jaymin Kim
On autonomous vehicle risk:
Early research tends to drive us to conclude that humans feel the bar for tech is much higher than for other humans. So if I look in many countries, depending on statistics, between 85 to 98% of accidents on the road are caused by human error. So if an AV [autonomous vehicle] were to deliver upon its premise, we’ll be driving out a huge amount of those accidents that are human controlled. However, we have to accept there will be a residual amount of accidents that are caused by technology or failure. — Sam Tiltman
