Economic and global trade concerns are challenging organisations’ ability to invest adequately in preparing for and protecting the continuity of their operations, according to findings from Aon’s 2019 Global Risk Management Survey.
“Companies of all sizes are struggling to prioritise their risk-management efforts amid so much change and uncertainty,” said Global Risk Consulting CEO Rory Moloney. “What was once a tried-and-true strategy for risk mitigation – using the past to predict the future – is now challenged and, coupled with a more competitive global economy, it is causing an all-time low level of risk readiness. As a result, risk-management plans need to take a different approach from those in the past.”
Aon surveys thousands of risk managers across 60 countries and 33 industries every two years to identify key risks and challenges their organisations are facing.
In the 2019 Global Risk Management Survey, respondents ranked economic slowdown as their top risk. Damage to reputation/brand was cited as the number two concern, reflecting the potential for significant consequences when corporate mishaps occur amidst a 24/7 news cycle on social media platforms. Accelerated rates of change in market factors stemming from an increase in protectionist international trade policies, which include rising regulatory activity and geopolitical tension, jumped from 38 in the previous survey to round out the top three concerns on the 2019 list.
Aon obtained responses for its 2019 Global Risk Management Survey in the fall of 2018, during a time of enormous uncertainty around the globe, fuelled by stock market declines, trade policy disputes, aggressive regulatory actions, massive recalls, an active cycle of devastating natural disasters, far-reaching cyber-attacks and corporate scandals. These broader macro-economic risks, combined with the speed of technology change, are contributing to a growing prominence of new threats that can disrupt supply chains and overall business operations. As a result, one-third of the top 15 risks are new entrants to the top 15 list, including accelerated rates of change in market factors and disruptive technologies.
Risk managers are reporting their lowest level of risk readiness in 12 years, as many of the top risks, such as economic slowdown and increasing competition are uninsurable. As a result, risk managers need to embrace risk management as opposed to risk transfer in order to mitigate these threats and protect their organisations from potential volatility.
“The changes in this year’s survey results indicate that the risk-management function must evolve to reach the enterprise level,” said Mr Moloney. “This, combined with the use of data and predictive analytics that can generate actionable insights, will help businesses protect their bottom lines while adapting to accelerated change and economic fluctuations.”
Participant profiles in Aon’s 2019 Global Risk Management Survey encompassed small (below $1bn), medium ($1bn - $15bn) and large (above $15bn) organisations, including respondents from privately-owned companies, public organisations, government and not-for-profit entities. M