What Are The Major Enterprise Wearables Risks In Healthcare? by Travelers
How technology companies can manage the risks of wearables to reap the rewards
At one time, people scoffed at the idea of a personal computer in every home. Today, we not only have high-speed Internet available in our homes, but we also connect to the Internet at will with a variety of mobile devices from wherever we happen to be. Tomorrow, we will be wearing Google glasses that allow us to instantly access all the information we need about anything that can be imagined.
In a previous issue of the Travelers Technology Risk Advisor series, I shared our vision for the Bring Your Own Device (BYOD) trend and how enterprises can manage their risks related to it. Today, we find ourselves in the midst of another mega-trend in technology: wearable devices.
Wearable devices represent an exciting and lucrative opportunity in several markets, with many of the world’s most innovative technology companies leading the way. Smart glasses, watches, armbands, and even clothing, hold the potential to transform the way we live our lives. Perhaps some of the biggest quality of life improvements will come in the medical and health care space, where wearable technology holds the promise of detection, prevention, and treatment of chronic disease.
Along with the tremendous upside potential, there are risks involved along the way that must be managed. Device makers and others who understand these risks will be better positioned to protect themselves from liability should devices go awry. This issue of the Travelers Technology Risk Advisor series will expose some of those risks and highlight actions wearable manufacturers should consider as we move forward into The Wearables Revolution.
— Mike Thoma
Chief Underwriting Officer, Travelers Technology
What Are The Major Enterprise Wearables Risks In Healthcare? – Executive summary
The wearable technology revolution promises to make us more connected and change our lives for the better. Fitness trackers will give us new insights to improve our health, exercise, and diet. Smart watches will keep us organized and better informed. Wearable virtual reality and holographic devices will take us to new worlds with the press of a button. Many of the largest and most innovative technology companies are aggressively pursuing the wearables opportunity, as are many emerging startups.
In this issue of our Technology Risk Advisor series, we look at both the upside and the downside of wearable technology. First, we consider wearable technology market size projections, identify key market drivers, and review prominent wearable technology product categories. Then, we identify and explore specific risk classes impacting companies involved with wearables, and we highlight for consideration several specific actions to minimize business risks. Finally, we conclude by highlighting insurance considerations that firms should evaluate with their independent agent or broker, as they pursue the lucrative wearable technology market.
Market size and drivers
Wearable technology and the Internet of Things (IoT) are poised to redefine mobility in the coming years. SNS Research estimates that wearable device shipments will account for nearly $20 billion in revenue in 2015, and grow at a CAGR of 40 percent over the next six years. Swiss research firm Soreon expects the wearables market to top $40 billion by 2020 in the health care market alone.
Several global market forces are driving the wearables adoption rate, all of which promise to change how we live and how we work. Companies that recognize and understand these drivers position themselves to capitalize on this lucrative and rapidly expanding field.
Driver 1: Moore’s Law and the miniaturization of technology
Perhaps one of the most powerful drivers is the technology itself. Gordon Moore, founder of Intel and Fairchild Semiconductor, wrote a paper in 1965 noting a doubling in the number of transistors per integrated circuit approximately every two years. This phenomenon, which has continued on a remarkably consistent path, has had a profound impact on digital electronics, allowing smaller devices to assume greater power.
The earliest UNIVAC machines of the 1950s filled rooms the size of department stores. On a regular basis since then, computer companies have released smaller and more powerful models, culminating in today’s high-powered smartphones and tablets. Wearable devices are simply the next iteration of this trend toward miniaturization of computing. When asked about the design of his new smart watch, Apple Chief Design Officer Jonathan Ive said, “It’s technology worn on the wrist. I sensed there was an inevitability to it.”
Driver 2: Corporate and workplace productivity applications
In the corporate sector, wearable devices promise innovation leading to productivity gains and cost savings. Field technicians wearing smart glasses and head-mounted cameras can send real-time video of off-site problems, eliminating the need for costly consultant travel. Many police departments have purchased wearable cameras for their officers and field investigators to gather crime scene data and interactions with the public.
But employees won’t be the only ones wearing these devices. Companies are now developing mobile devices with Near Field Communication (NFC) chips that enable customers to make credit card payments directly from their devices. Marketed as a combination of function and fashion, these wearables are the next step toward frictionless payment systems – a concept industry experts hope will increase revenues. Disney has invested $1 billion (USD) on the magic wristband, a wearable device that makes it easier for guests to enjoy their theme parks.
Driver 3: Medical and health applications
Industry experts predict that substantial investment in wearable devices will come from the health and medical sector. The weight loss and longevity markets have been extremely profitable in recent years, a trend that is likely to continue. In a recent PricewaterhouseCoopers survey, 56 percent of the respondents felt that wearable health devices could extend their life expectancy by 10 years. Forty-six percent see these devices as a way to help control obesity, and 42 percent expect health wearables to improve their athletic ability.
As hospital stays become shorter, many doctors are sending patients home with wearable health sensors. These devices can capture real-time vital signs and transmit results to doctors or response personnel in the event of an emergency. Likewise, big data is big business in the medical sector. IBM finds the medical market so attractive that they have invested $1 billion (USD) in IBM Watson Health, a global analytics cloud, storing health information powered in part by wearable device data feeds.
As hospital stays become shorter, many doctors are sending patients home with wearable health sensors. These devices can capture real-time vital signs and transmit results to doctors or response personnel in the event of an emergency.
Driver 4: Safety and security applications
Employee safety has become a major concern in the workplace. Many employees are required to use both hands when operating forklifts or heavy industrial equipment. As part of their job, they must also shift their focus to enter job-specific data into a PC terminal. Wearable devices can make them safer by automatically capturing and/or recording data without requiring them to break concentration on the task at hand, keeping both hands free at all times.
Wearable devices can also help keep individuals safer