Aon Limited, The U.K.-based insurance broker and risk management consultant for the Aon Group, has published its 2006 Risk Report assessing some of the major new and existing risk challenges for UK businesses. Climate change and pandemics (presumably avian influenza, or bird flu) along with oil prices and terrorism have joined “the more traditional threats to the health and well being” of the U.K.
The unprecedented U.S. storms figure prominently in Aon’s analysis, but there are other concerns as well. “While businesses continue to deal with traditional risks such as employers’ liability and directors’ and officers’ liability, exacerbated by factors such as a growing UK compensation culture or more litigious shareholders, new or re-emerging risks such as oil price volatility, pensions scheme legacies, terrorism, pandemics, and climate change have all risen up the corporate agenda,” Aon said.
The “Key Points” highlighted in the report include the following:
— Storm damage topped the causes of insurance losses in 2005, with Aon expecting further increased hurricane activity in the short term
— After the oil price surges of 2005, Aon advises businesses to recognize the historic volatility of the oil markets and plan for the prospect for sudden price falls as well as rises
— The history of global pandemics shows why businesses need to bring threats such as avian flu higher up the company agenda and to treat them differently from earlier corporate concerns such as SARS and the technological threat off Y2K
— As the world learns to live with the new age of terrorism, the market for terrorism risk is maturing – premiums remain soft – but the need for cover is increasingly acknowledged by business
— With two thirds of companies having no exit strategy in place for their defined benefit pension schemes, companies need to take action now to deal with this legacy
Aon U.K.’s Chairman and Chief Executive Dennis Mahoney commented: “It really is a case of in with the old and in with the new as we begin 2006. Old risks aren’t going away and are increasingly being supplemented by new and previously unseen threats. Globalization means that risks that were once prevalent only in far-away countries are now right on our doorstep. Terrorism, pandemics and environmental risks know no boundaries. Businesses need to be ever more alert and plan ahead. Whilst the risks in 2006 are unlikely to be identical to those in 2005, this report provides a reminder of the extent to which companies are exposed and need to be prepared”.
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