Report highlights business risks facing technology

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Companies are working hard to balance the responsibility to protect the business from viruses and the safeguarding of freedom of expression, according to a report by UK compnay F & C Asset Management.

Technology companies are particularly torn, says F&C head of governance and sustainable investment Karina Litvack.

“For instance, in February 2006 US software companies Google, Yahoo!, Microsoft, and Cisco Systems were called before the US Congressional subcommittee on global human rights to explain their role in limiting freedom of expression and privacy on the internet in China,” she said.

“Cisco, which sells network equipment products to Chinese authorities that are widely used in their internet Golden Shield Project, or ‘the Great Firewall of China’ as it is known elsewhere in the world, faced a revolt when 29% of shareholders supported a proposal at the 2006 annual meeting asking the company to report on how its products are being used to limit freedom of expression,” said Litvack.

Shareholders are concerned about the business and reputation impacts of doing business with certain customers, and companies need to assess these risks carefully, says F&C.

“Companies involved face not only reputational but considerable legal risks,” said Litvack.

“For example, US telecommunication companies AT&T, Verizon and BellSouth are now being sued for a combined $200 million (EUR*154 million) for violating customer privacy laws, having allegedly submitted customer records to the US National Security Agency’s new anti-terrorist call-tracking programme in 2006,” she said.

Security issues and the proliferation of viruses are another big business risk that has recently been identified among the top 10 issues for customers, according to Swedish telecoms operator Ericsson. Microsoft reported last year that “security vulnerabilities in our products could lead to reduced revenues or to liability claims.”

Telecoms giant Vodafone has developed a group strategy for managing potentially offensive content that balances global standards against local cultural norms, it says.

“We are committed to offering our customers a wide range of services. However, we recognise that this may not be appropriate for everyone, particularly young people,” said Vodafone head of content standards Annie Mullins.

“Where a wide range of services are available, we will limit access to age-restricted content, in a similar manner to other media platforms. This applies across our business,” she said.

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