6 Trade Secret Risk Multipliers

Trade secrets are vitally important for businesses of all kinds. But as these intangible assets have grown in importance, so too have the threats against them.

Changes in technology and workplace expectations have created what I call "risk multipliers," which amplify the threat of trade secret misappropriation. Understanding these multipliers is essential to protecting what you've built.

This article highlights key risk multipliers across two critical areas: changes to technology and changes to the workplace.

Changes to Technology and the Impact on Trade Secrets

As technology has accelerated in recent years, we’ve become increasingly reliant on digital tools to process information and make it readily available. These tools have benefited business, but they’ve also opened up major new exposure points that you need to understand.

Digitization: The shift from physical files to digital data has revolutionized how we manage information. One report found that the total data stored globally is close to 200 zettabytes. I confess I had never heard of a “zettabyte” before I saw the report, but apparently it’s a mind-boggling amount of data. But digital information is easy to steal. Unlike paper files that have to be physically moved or copied page by page, digital files can be copied in a matter of seconds.

Cloud Computing: Storing data in the cloud rather than local hard drives and servers has created new ways for data to be accessed. Cloud computing is a double-edged sword. While it offers the convenience of remote access and the safety of distributed storage, it also means your data is always moving and present in many places at once. And the unfortunate reality is that companies often impose fewer security controls on cloud storage than on internal systems.

Personal Devices: The use of personal smartphones, laptops, and other devices for business has further complicated the security landscape. These often lack the monitoring and controls of company equipment, making employee activity hard to track. And when employees leave, company information on their devices often goes with them. Personal devices give employees an unprecedented means and opportunity to steal trade secrets from the comfort of their own homes.

How Changes to the Workplace Affect Trade Secret Protection

The workplace has also dramatically changed in recent years. The mobility and telecommuting that were once exceptions to the rule are now fixtures of the modern workplace. They bring undeniable convenience and flexibility, but they also introduce new threats to your trade secrets.

Remote Work: Though remote work was technologically feasible for years, the COVID-19 pandemic accelerated its widespread adoption. While some employers have now brought their workers back to the office, others continue to support remote work. But without the accountability of an office environment, employees can more easily access files on personal computers, share them through unmonitored channels, and use them for unauthorized purposes. As with many things, convenience and flexibility come with increased risk.

Employee Mobility: People change jobs far more frequently than in earlier generations. The Bureau of Labor Statistics reports that the average employee stays at a job less than four years, and the average tenure is shorter than that in many industries. And with every employment transition comes not only a loss of talent but an opportunity for trade secrets to go out the door. Employees can—and quite often do—take files and documents with them when they leave to gain an advantage at their new employer or launch a competing business of their own. 

The Freelance Economy: The growth of freelance and contract work also poses new challenges. It’s the ultimate form of employee mobility. One report found that gig workers accounted for 36% of the U.S. workforce in 2021—that’s around 50 million people. These individuals typically work on a temporary basis and juggle multiple clients at once, increasing the risk of cross-sharing information. For example, a contract developer might repurpose the proprietary code it developed for you and in the process destroy the unique value it adds to your business.

Information flows through devices, networks, and organizations in ways unimaginable just a few years ago. These changes demand new levels of vigilance in protecting your trade secrets.

Read the next article in this series to understand the domino effect of adverse consequences that can follow a trade secret misappropriation incident. You ‘ll see some of the most significant impacts of trade secret loss and how they can threaten the foundation you’ve worked so hard to build for your business.