Importance Of Risk Management For Technology Start-Ups
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Risk-taking is the culture of some technology start-ups like Uber, Airbnb and PayPal. Until recently, industries have established methods for production, sales and distribution. However, technology start-ups introduced unique and untested products and services that disrupted most industries.
Technology firms understand the risks in being able to succeed long term. They are smart enough to understand the risks that they have to face, which of the risks can be mitigated and what risks to avoid. Risk management is always part of the strategy of nearly every company that depends on technology. There are advantages to technology but there are risks from representational to cyber to regulatory and privacy.
According to Laura Langone, head of insurance operations of short term rental giant Airbnb, risk is definitely at the forefront of their operations. There are cyber threats that are critical to their reputation. There is data and compliance to data requirements that must be seriously considered.
Risk managers must understand technology risks and how to offset, transfer and manage the risks. Airbnb attracts hosts to their platform by making sure that they will be protected by insurance from any liabilities arising or damages to the property. Hosts become more comfortable because of the coverage for short term rentals. Risk managers must be able to communicate with other professionals and organizations in mitigating risks.
The use of technology has allowed companies to become more efficient in improving their business processes. Companies gain better insight through the use of data that allows them to understand their customers. Data allows companies to offer goods and deliver services in a timely manner. However, data can be compromised when exposed to cyber fraud, misapplication or misappropriation. This is where the importance of risk management comes in.