Aon Global Risk Management Survey: Top global business risks revealed
The current economic slowdown, regulatory and legislative changes, and business interruption were ranked as the top three business risks by respondents who participated in Aon’s 2009 Global Risk Management Survey.
The biennial analysis is based on responses from 551 organizations in 40 countries. The findings are representative of a broad range of industry sectors around the globe and presented in four key components:
- Top Ten Risks
- Overall risk preparedness
- Business losses related to risk
- Key business topics/functions
Newcomers to the Top 10 Risks list when compared to the list in 2007 included increasing competition (in fourth place); Commodity price risk (in fifth place) and cash flow/liquidity risk (in seventh place).
Compared to findings in 2007, most organizations have increased their overall risk preparedness. However, less than half of survey respondents report they are tracking and managing all components of their total cost of insurable risk. More importantly, for three of the Top Ten Risks (economic slowdown, damage to reputation and regulatory/legislative changes), less than two thirds of respondents indicate they have formally reviewed the risk or have a plan in place.
The 2009 Aon survey indicates that virtually no company, industry or country is immune to today’s unprecedented period of economic unrest. While reputation risk has fallen from its top position in the firm’s 2007 survey, the importance of this threat is not diminished. Reputation risks impact the public’s perception of the quality, integrity and intention of an organization, influence a partner or customer’s decision to do business with a firm and may affect a government or regulator’s decision to allow a company’s actions. Regulations and legislation are now perceived as the second greatest risk factors facing business, according to the Aon survey. While it remains unclear as to whether more stringent regulations are expected to expand to the majority of industry sectors, an increase in regulation within the financial sector is widely anticipated. For multinational organizations, the cost, quantity and complexity of regulations presents serious compliance challenges.
“While these complex risks carry with them a degree of unpredictability that may impact an entire enterprise, they are in fact manageable,” said Stephen Cross, CEO of Aon Global Risk Consulting. “Those organizations prepared to capture opportunity will lead the way out of the economic downturn with robust and proven risk management strategies in place, and clear objectives set for future success.”
