Is your business at risk from digitisation?

Insolvencies rose by 18% in April.

The rate of insolvencies over the past 12 months was 57 per 10,000 companies, higher than the previous year. However, the figures are still lower than the peak during the 2008-2009 recession.

Now there are warnings of a new risk to companies: digitisation.

According to Reuters: “The digitalisation and entry of Big Tech into finance create new vulnerabilities and amplify existing risks in the banking system”.

The Basel Committee of banking regulators lists growth of cloud computing, AI, and distributed ledger technology (DLT) as the additional risks.

“These can include greater strategic and reputational risks, a larger scope of factors that could test banks’ operational risk and resilience, and potential system-wide risks due to increased interconnections,” says the Basel report.

It will now consider whether there is a need for additional standards or guidance are needed to mitigate risks and vulnerabilities.

At a time when the economy may be slowly beginning to recover businesses will need to rely on their banks as much as ever.

They would also be advised to keep a close eye on their cash flow for obvious reasons.

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