Around two-thirds of the world’s largest companies face high levels of industry disruption, with almost half already showing severe signs of future susceptibility.
That is according to new research from consultancy firm Accenture, which studied the presence and market penetration of disruptor companies in various different sectors.
It was found that the insurance and healthcare industries are in a ‘vulnerability stage’ of disruption, with structural weaknesses exposing them to significant risk.
However, barriers to entry currently inhibit disruptor companies in these markets, with incumbents being urged to position themselves so they can develop and leverage future innovations.
This will involve these firms improving the productivity of their legacy businesses, and shifting dependence on fixed assets to monetising underused assets.
“Disruption is continual and inevitable, but it’s also predictable,” Accenture’s chief strategy officer, Omar Abbosh, said.
“Business leaders need to determine where their company is positioned in this disruption landscape and the likely speed of change.”
The research involved a study of 3,600 firms with at least $100m (£72m) in annual revenues across 82 countries, analysing incumbents’ financial performance, operational efficiency and commitment to innovation.
Around 19% of companies fall into a ‘durability stage’ where disruption is not life threatening, and another 19% are in the vulnerability state, while a quarter are categorised in a ‘volatility stage’ where disruption is prominent.
However, it was found that 37% of the world’s largest businesses are in a ‘viability stage’ of constant disruption, where competitive advantages are short-lived, and include high tech and telecommunication firms.
The four periods of industry disruption are shown below:
“We found that the lower an industry’s digital performance, the more susceptible it is to future disruption” Accenture Digital group chief executive, Mike Sutcliff, said.
“Digital technologies can help make a company more resilient in times of disruption, driving better outcomes from existing products, developing entirely new digital services, lowering costs, or increasing barriers to entry.”
An increasing reliance on data and IT systems has seen cyber incidents shoot to the top of the most pressing risks facing businesses worldwide, research by Allianz has uncovered.
17 January 2020
The majority of risk managers worldwide cannot adequately assess the threats posed by new technologies, research by Accenture has found.
10 December 2019
Financial institutions will save $7bn (£5.43bn) by 2024 thanks to blockchain technology and the automation of customer checks, a market research firm has predicted.
05 November 2019
Why InsurTech? A Pressured Insurance Value Chain
By Andrew Sagon, Andrew Johnston and Matthew Wong
InsurTech is a burgeoning phenomenon that is modernising the insurance industry. It is disrupting the traditional value chain whereby insurers offer loss protection, and shifting the emphasis to risk mitigation. Incumbents face disintermediation as investors in search of higher yields pour money into insurance-linked instruments in the capital markets. And entrepreneurial businesses are targeting friction costs and inefficiencies within every aspect of the traditional value chain.
Nimbleness and agility will unlock potential
By Elinor Friedman, Andrew Harley and Klayton Southwood
Recent Willis Towers Watson surveys in the U.S. have shown that P&C and life insurers in developed markets are taking seriously the potential of big data and predictive analytics to improve their businesses. Nimbleness and agility, rather than brute force, are likely to be key to realizing that potential.
Driven by technology, toolkits and talent
By Claudine Modlin and Graham Wright
Advanced analytics is helping some insurers offer innovative products and solutions. What do insurers need to know about the changing nature of analytics and whether it is worth the investment? Claudine Modlin and Graham Wright discuss technology, toolkits and talent — topics that may help you decide.
Risk transfer is part of a comprehensive solution
By Adeola Adele, Patrick Kulesa, Kevin Madigan and Alice Underwood
Given the dynamic nature of cyber-risk, taking a multidimensional approach that integrates board governance, technology solutions, behavioral change and risk transfer solutions can help reduce risk to a manageable level.