Having helped Olivetti move from an analogue IT firm to a high-speed wireless telecoms company, Paolo Rubini explains how he is managing the risks of the next wave of technological changes
From analogue technologies to high-speed mobile connectivity, Paolo Rubini has been at the forefront of one of most important technological revolutions to revamp modern-day business and everyday life: the move from wireline technology to wireless communication.
Rubini has worked for 25 years in risk management at some of Italy’s technology companies and strengthened Telecom Italia in Italy and Brazil as its head of insurance. His resumé is filled with achievements: establishing a global insurance programme used to manage the risks in 35 countries at Olivetti; creating a complex risk analysis tool that predicts the threats to 10,000 offices in Italy in his role at Telcom Italia, as well as implementing an ERM culture.
However, in the digital age where on-the-go internet products and services are becoming the norm, Rubini’s story of working through two significant technological revolutions – the mobile phone boom of the 1990s and the post-millennium advancement of Wi-Fi devices (and risk-managing the risks linked to these technologies) – is perhaps the most interesting of his career to date.
In 1989, at the beginning of the mobile phone boom, Rubini joined Italy-based, global typewriting manufacturer cum-information technology firm Olivetti. With operations across the world producing traditional office products, from calculators, fax machines, to electronic word processing equipment, personal computers, printers and photocopiers, Rubini’s first job was to establish a multinational insurance programme to cover the company’s general liability and property risks. His role would, however, soon become more complex when he took on the job of corporate risk manager in 1992. It would mark the first time Rubini encountered the threats new technology posed on the analogue world.
“The main change for the company took place in 1994. By then, the personal computing business was mature and we started to loose market share quickly. This was not helped by the fact the Far-East had entered the PC market too and the market was becoming more and more competitive. The PC was becoming a commodity.”
Cutting the cord
After a period of fierce global competition in the IT market, Olivetti’s profits plummeted and the company decided to leave the wireline world of faxes and PCs to enter the wireless telecoms industry, a market that is now worth hundreds of billions of dollars and is set to grow further, amounting up to $1.7trn (€1.3trn) in 2017.
In 1994, with some of the world’s largest telecoms operators, Olivetti established Omnitel, a mobile network provider that became the second mobile network in Italy and the first
telephone alternative to monopolist Telecom Italia.
Omnitel offered commercial services at the end of 1995, but making the move from wired to a wireless was tricky. “When Omnitel was awarded the licence, it began work on building the antennas and all the components needed to support mobile communication and all these elements had to be insured and the risks had to be managed,” explains Rubini. “The complication was that Omnitel was funded through a project financing operation, where the majority of the capital came from the bank.
“It was the largest financing project in Europe at the time, and we had to convince the bank that the risks were properly managed. I had to build the insurance programme from scratch, assessing the risks for the telecoms industry. At the time, the telecoms industry in Italy was in its infancy and so the threats were mainly traditional risks such as building and erection all risks and liability insurance to cover the construction stage of creating the network.
“We had to pass several checks from the bank and I had to demonstrate that all aspects of Omnitel’s risk management function were strong and that the insurance market was robust enough to cover any potential losses. Ultimately, the bank had to be convinced that Omnitel could stand on its own feet, independent of Olivetti. Finally, the bank gave Omnitel the green light and it went on to become a strong competitor of Telecom Italia.”
Rubini experienced his second wave of technological advancement when he became the risk manager at Telecom Italia in 1999, after Olivetti bought 54.96% of the shares in the company. However, Olivetti had to sell Omnitel to comply with anti-trust regulations and did so to a Germany-based telecoms company, Mannesmann (which was later acquired by Vodafone).
The Olivetti-Telecom Italia takeover took place during the year that the first mobile-web service became available. Mobile phone manufacturers and network providers were able to offer this Internet service via WAP (wireless application protocol) and the first web-handsets reached the European market in 1999. This was the first indication of what mobile phones could turn into: web-connected mini PCs or what are known today as smartphones.
These on-the-go internet devices have grown in popularity. In 2012, the number of people globally who owned a smartphone surpassed one billion and this figure is expected to reach 1.75 billion this year, according to digital marking and research company eMarketer. The company predicts that by the end of the forecast period, smartphone penetration among mobile phone users globally will be almost 50%.
Cutting the cord
This trend meant that, once again, Rubini would face the challenges of managing the risks of a new breed of technology.
“Simple voice exchange services, in mobile phones, are no longer providing revenue and are becoming a commodity,” Rubini explains. “All the big telecoms companies are now adding new services to their portfolio, providing mobile data and internet protocol-based voice services.
“For instance, we are starting to offer cloud services and working more to provide internet-based business. Additionally, with a lot of talk about new internet of things (IoT) technologies, we are keeping a close eye on how these develop.
“These new added-value services will, of course, increase our cyber risk exposure and compound existing risks. For instance compliance risks have increased as a result of tougher privacy laws and this will in turn raise professional liability risks.
“With internet-based services demanding a constant and strong connection, mobile phone operators face greater challenges in preventing any risks that might interrupt their connection. Continuous 24/7 and uninterrupted connections are absolutely vital in the digital and information age. These changes mean that we have had to adapt our insurance portfolio accordingly.”
As Telecom Italia celebrates its 20th anniversary this year, looking to what the next decade will bring in terms of technological advancement is on Rubini’s mind.
IoT, or machine-to-machine technology, although still in its infancy, provides an inkling as to what the next tech revolution will be. IoT will expand the network of interconnected internet-enabled devices where, for instance, a smartphone could be connected to home appliances, front doors, lights, via the internet. This will enable users to control their home from their smartphones. Having worked through two waves of technological change, Rubini is sure to be equipped with the risk management know-how to respond to this new wave.
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