Joe Plumeri, Chairman and CEO of Willis Group Holdings Limited, the global insurance broker, today called on corporate leaders to recognize and address the risks facing business at the start of a new decade. Plumeri delivered his remarks at Town Hall Los Angeles.
Plumeri, asserting that the world has changed dramatically over the past 10 years, highlighted what he considers the top 10 risks facing business today, and argued that companies have yet to make the changes necessary to adapt to a more dangerous and unpredictable world.
“The risks confronting business today are new, complex and increasing. The old
answers just won’t cut it,” Plumeri said in prepared remarks at the Omni Los Angeles Hotel. “Before our government bailed out Citibank, AIG and General Motors, most of us thought those things could never happen – but they did. The world has changed dramatically in the past decade. It’s a dangerous place full of new and complex risks. But are we doing anything differently today? I don’t think so.”
Plumeri also said new risks have emerged at the end of the first decade of the 21st century that barely received consideration 10 years ago, including global climate change, terrorism, pandemic disease, the cost and availability of credit, globalization, cyber security, piracy on the high seas, supply chain integrity, increased regulatory and compliance dangers and greater threats to corporate reputation.
Pointing to studies that show trust in business has crumbled during the economic downturn, Plumeri argued that the most effective way to manage these emerging challenges is for leaders to adopt a new commitment to transparency in recognizing and mitigating risk.
“Whether it’s severe weather or pandemics or cyber security, the simple truth is that the risks of the 21st century are big, and real, and must be faced openly and transparently,” Plumeri said, urging business leaders to embrace enterprise risk management. “As business leaders, we must look at all the risks we face and address them head on. And we have to be honest and open about what we see and what we’re doing about it. That is the only way to make our customers and the public believe in us again.”
Noting that California, in particular, faces a severe threat from the effects of global
climate change, Plumeri also highlighted the work of the Willis Research Network to study and assess these emerging risks. The network is a public-private partnership between Willis and many of the top scientific research institutions in the world.
In California, Willis is working with the U.S. Geological Survey on “ARkStorm,” a
simulation of a major weather event comparable to the severe storms that flooded Los Angeles and created lakes in the Mojave Desert during the winter of 1861-1862. While most people may barely imagine such a storm hitting again, Willis is working to address the risks of a disaster that most climate scientists consider to be inevitable. Property and related losses from a storm of similar force today likely would exceed $50 billion, according to scientists in the Willis Research Network.