The emergence of GenAI is reshaping the 2024 telco risk radar

• Security concerns top telcos risk ranking, accelerated by rise of generative AI
• Talent is a new Top 10 risk amid financial pressure and urgency for digital skills
• Response to consumers during the cost-of-living crisis remains a pressing risk; in Asean, the telco-to-techco transformation also makes engagement with external ecosystems crucial

Changing imperatives in privacy, security and trust emerges as the top risk facing telecommunications companies (telcos) in 2024. According to the annual EY report, Top 10 risks in telecommunications, cyber-resilience is under pressure, with generative artificial intelligence (GenAI) throwing into question existing data governance strategies.

The top 10 risks included in the 2024 report are:

1. Underestimating changing imperatives in privacy, security and trust
2. Insufficient response to customers during the cost-of-living crisis
3. Inadequate talent and skills management
4. Poor management of the sustainability agenda
5. Failure to take advantage of new business models
6. Inadequate network quality and value proposition
7. Failure to improve workforce culture and ways of working
8. Ineffective engagement with external ecosystems
9. Inability to adapt to the changing regulatory landscape
10. Failure to maximize value of infrastructure assets

Sixty-eight percent of telco respondents believe they are not doing enough to manage the unintended consequences of artificial intelligence (AI), and 74% say they need to do more to mitigate against “bad actors” who could use AI to support cyber attacks and other malicious activities¹. At the same time, 53% of telcos believe the cost to their organization of cyber breaches will exceed US$3m in 2023, up from 40% in 2022².

The influence of AI also sees regulation climb on the 2024 risk radar – from 10th to ninth position. The report highlights that question marks surround the nature of future AI legislation, creating uncertainties for telcos. These pressures are heightened by a divergence in emerging policies between countries regarding the balance between AI guidelines and planned legislation. In the EU specifically, this has triggered concerns that AI could stifle innovation and limit international competitiveness³.

Joongshik Wang, EY Asean Technology, Media & Entertainment and Telecommunications Sector Market Segment Leader, says:

“The existing framework and governance of data privacy, cybersecurity and trust is expected to be heavily impacted by AI. Different emerging policies, dependent on different country legislations also add complexity. As telcos in Asean escalate their investments in AI, laying a robust foundation for data governance from the outset becomes imperative in order to strategically navigate risks and ensure a secure and forward-looking digital future."

The drive to attract and retain talent

Insufficient talent and skills management is a new entrant to the Top 10, debuting in third position. Again, AI is an influencing factor. With new technology cycles in both GenAI and edge computing on the horizon, digital talent is increasingly in demand. In addition, a shortage of network engineers presents a more immediate challenge to the industry⁴.

This trend is compounded by financial pressures, which are threatening the future talent pipeline. More than half (55%) of telco employers have introduced hiring freezes – almost double that recorded across all sectors (28%). And 61% of telcos say talent retention is being hampered by salary and benefits cuts as part of a cost-reduction drive – well above the sector average (44%)⁵.

Wang says: "As telcos increasingly embrace emerging technologies for the future, the significance of acquiring digital talent and making investments in upskilling and reskilling becomes even more pronounced. In comparison with developed nations, telco operators in Asean encounter greater challenges when it comes to recruiting skilled personnel due to a scarcity of highly talented resources.”

Consumers want a better deal

Falling just one place to second position on the Top 10 shortlist, telcos’ response to consumers during the cost-of-living crisis remains a pressing risk for 2024. While only 16% of consumers are actively reducing their spend on fixed and mobile connectivity, many are looking for better deals and advice – with 60% agreeing that the cost-of-living crisis has made them more likely to shop around for the best deals. Indeed, the proportion of households going to price comparison sites or friends and family for recommendations has climbed from 19% last year to 30% in 2023⁶.

1 “EY CEO Outlook Pulse Survey,” (telco respondents), Jul 2023.

2 “EY 2023 Global Cybersecurity Leadership Insights Study,” (telco CISO respondents), Oct 2023.

3 “The Artificial Intelligence global regulatory landscape,” EY, Sep 2023.

4 “Telecommunications Workforce: Additional Workers Will Be Needed to Deploy Broadband, but Concerns Exist About Availability,” US Government Accountability Office, Dec 2022.

5 “EY 2023 Work Reimagined Survey,” (telco respondents), Sep 2023.6 EY decoding the digital home study, September 2023

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Notes to editors

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About the report

Top 10 risks in telecommunications 2024 is part of an ongoing series of reports designed to pinpoint the most critical risks facing the telecommunications sector. Analysis draws on the EY sector research program by leveraging insights from EY industry and consumer surveys and harnessing them with the evolving perspectives of sector practitioners. The findings are categorized using the EY risk radar, which organizes risk factors into four domains:

• Compliance threats that originate in politics, regulations or corporate governance
• Operational threats that impact the processes, systems, people, and the overall value chain of the business
• Strategic threats that are related to customers, competitors and investors
• Financial threats that stem from volatility in markets, ecosystems and investments