Aon Risk Solutions, the global risk management business of Aon plc, has unveiled the key risks as identified by its clients across the globe. Cyber risk made the list for the first time in the No. 9 spot, which the bulletin noted reinforced “its emergence as a key risk factor.”
Topping the list is damage to brand and reputation, which was the survey said is the “overall concern facing global organizations, 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.”
Aon also noted that its “global clients strongly felt that damage to brand and reputation ranked as a top concern across almost all regions and industries. This can be attributed to the growing challenges businesses are facing amongst the risks found in the top 10 list, such as cyber risk, but also including business interruption, property damage and failure to innovate.”
Aon Global Risk Management Survey received 1400 answers from respondents. These included “included CEOs, CFOs and Risk Managers,” who thereby provided “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.”
Aon Risk Solutions Chief Innovation Officer Stephen Cross commented: “The insights provided by this survey help us 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 is surprising was 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.”
Aon Global Risk Consulting’s CEO Rory Moloney described the study as “one of the most comprehensive and insightful surveys available on risk mitigation;” adding that it “reveals a number of different challenges driven by today’s globally inter-dependent environment.
“While new risks such as cyber have moved to center stage, established risks like 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 organization.”
The top 10 risks in Aon’s survey were listed as follows:
1. Damage to reputation/brand
2. Economic slowdown/slow recovery
3. Regulatory/legislative changes
4. Increasing competition
5. Failure to attract or retain top talent
6. Failure to innovate/meet customer needs
7. Business interruption
8. Third party liability
9. Cyberrisk (computer crime/hacking/ viruses/malicious codes)
10. Property damage
The bulletin also pointed out that “failure to innovate/meet customer needs” while at No.6 in the current survey, was expected to rise to No.4 by 2018. “Respondents in the technology industry indicated that this is the most significant risk to their business,” Aon said. “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 “re-entered the top 10 global risk list for the first time since 2007, up from 17 in 2013.” It was the highest risk for “hotels and hospitality, non-aviation transportation and real estate,” Aon said. It attributed this to the “unprecedented weather events in recent years,” which Aon pointed out “have bundled this risk with the cause and effect of business interruption, which took the seventh spot on the 2015 list with reported losses down more than 10 percent from the 2013 survey.”
The full report can be accessed at http://www.aon.com/2015GlobalRisk/default.jsp
Source: Aon Risk Solutions
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