Aon Risk Solutions, the global risk management business of Aon plc, has unveiled the key risks identified by its clients across the globe. For the first time, cyber risk entered the Top 10 at number nine, reinforcing its emergence as a key risk factor. Damage to brand and reputation was cited as the top overall concern facing global organisations, further underscoring the increasing importance of cyber risk as it has been regularly linked to brand and reputation issues in the wake of data breaches.
At the present time, Aon’s global clients feel strongly that damage to brand and reputation ranks as a foremost concern across almost all regions and industries. This can be attributed to the growing challenges businesses are facing among the risks found in the Top 10 list, such as cyber risk, but also including business interruption, property damage and failure to innovate.
The 1,400 survey respondents to the Aon Global Risk Management Survey included CEOs, CFOs and risk managers providing comparative insight into different perceptions of risk. Typically, financial and economic risks including commodity price risk, economic slowdown and technology failure were seen as damaging at C-Suite level with risk managers focused on liability-related risks such as cyber, property damage and third party liability.
Stephen Cross, chief innovation officer at Aon Risk Solutions, said: “The insights provided by this survey help us to understand how risks are changing as the global environment evolves. It’s little surprise to see cyber risk enter the Top 10 at the same time we are seeing increasing concern about corporate reputation as the two issues are a great example of the interconnectivity of risk. What’s surprising is the lack of alignment between the Board and the risk manager. Such diverse views illustrate how imperative it is that the Board of Directors have effective and regular communication with risk managers to effectively assess and mitigate the company’s risk exposure.”
The Top 10 Risks in 2015
*Damage to reputation/brand
*Economic slowdown/slow recovery
*Failure to attract or retain top talent
*Failure to innovate/meet customer needs
*Third party liability
*Cyber risk (ie computer crime/hacking/viruses/malicious codes)
Failure to innovate/meet customer needs remained at the sixth spot on Aon’s 2015 Global Risk Management Survey and is projected to rank at four in 2018. Respondents in the technology industry indicated that this is the most significant risk to their business. The threat severity of this risk tied to increasing competition, which is expected to top the list in three years, raises a red flag for the insurance industry.
Property damage also re-entered the Top 10 global risk list for the first time since 2007, up from 17 in 2013. This risk was ranked highest by professionals involved with hotels and hospitality, non-aviation transportation and real estate.
Unprecedented weather events in recent years have bundled this risk with the cause and effect of business interruption which occupies the seventh spot on the 2015 list with reported losses down more than 10% from the 2013 survey.
New dimensions and complexities
Rory Moloney, CEO of Aon Global Risk Consulting, stated: “This is one of the most comprehensive and insightful surveys available on risk mitigation and reveals a number of different challenges driven by today’s globally inter-dependent environment. While new risks such as cyber have moved to centre stage, established risks such as damage to reputation or brand are taking on new dimensions and complexities. The interconnected nature of these risks reinforces the importance of strategic risk management in every organisation.”
Aon’s 2015 Global Risk Management Survey is designed to offer organisations the insights necessary to compete in an increasingly complex business environment.
Carried out bi-annually, the latest survey gathered input from 1,418 respondents at public and private sector companies of all sizes around the world. The 2015 findings from the survey, which was conducted in ten languages and completed by respondents from multiple countries, underscored that companies are grappling with new risks and that there are differences of opinion on how to best prioritise and respond to them.
*Copies of the full report can be accessed online at: http://www.aon.com/2015GlobalRisk/default.jsp