Organizations report decline in risk readiness: Aon

New report identifies top 10 risks facing organizations today

Risk leaders are struggling to identify and manage the major risks facing their organizations, according to the biannual Aon Global Risk Management Survey released today from Aon Risk Solutions. The report reveals the top 10 risks facing organizations today and illustrates the importance of evaluating risks holistically to establish and maintain a successful risk management program.

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The 2013 Aon Global Risk Management Survey found that there was a significant decline in risk readiness among many of the survey respondents. On average, reported readiness for the top 10 risks dropped a material 7% (from 66 to 59%) from the 2011 survey and reported loss of income increased 14%.

Of the 28 industries defined in the report, only three industries – pharmaceutical and biotechnology, non-aviation transportation manufacturing and agribusiness – reported the same or improved levels of readiness this year.

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“One possible explanation of the decline in risk readiness could be that the prolonged economic recovery has strained organizations’ resources, thus hampering the abilities to mitigate many of these risks,” said Stephen Cross, chairman of Aon Global Risk Consulting, in a press release. “Our survey revealed that, despite diverse geographies, companies across the globe shared surprisingly similar views on the risks we are facing today – whether or not they feel prepared.”

Aon saw the number of respondents to its latest Global Risk Management Survey jump to more than 1,400 – a 47% increase from its 2011 Global Risk Management Survey. The 2013 survey ranked the top 50 risks companies face, focusing on the top 10 risks in 2013 and how they may change in 2016.

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The Top 10 risks identified were:

Risk DescriptionRisk rank – 2013Risk rank  -projected 2016
Economic slowdown/slow recovery

1

1

Regulatory/legislative changes

2

2

Increasing competition

3

3

Damage to reputation/brand

4

8

Failure to attract or retain top talent

5

5

Failure to innovate/meet customer needs

6

4

Business interruption

7

11

Commodity price risk

8

7

Cash flow/liquidity risk

9

10

Political risk/uncertainties

10

6

 

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Economic slowdown/slow recovery, regulatory/legislative changes and increasing competition were the top three risks in 2013 and 2016. These risks also take top spots on the risk rankings for the survey’s five main regions, which include Asia Pacific, Middle East and Africa, Europe, Latin America and North America. These same three risks are also among the top risks for 24 of the 28 industries surveyed. This ranking reflects the systemic nature of these risks and the high interdependence of global economic activity.

Political risk/uncertainties broke into the top 10 risks for the first time in 2013. Due to increasing civil wars and social and political conflicts around the world, this risk is projected to move up to number six in the 2016 survey. Weather/natural disasters, while not far off the radar at a current ranking of number 16, is also projected to jump into the top 10 list at number nine, given the unusual climate patterns worldwide and an unprecedented increase in natural disasters and weather events. Failure to innovate/meet customer needs is an increasing priority, projected to jump from number six to number four in the next three years. Business interruption is expected to drop out of the top 10 risks due to companies’ efforts to improve business recovery planning.

The 2013 Aon Global Risk Management Survey also uncovered several significant risks to watch, as these are perceived to be underrated risks.

Risk DescriptionRisk rank – 2013
Computer crimes/hacking/viruses/malicious codes

18

Counter party credit risk

20

Loss of intellectual property/data

29

Social media

40

Pension scheme funding

47

 

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Copyright © 2017 Transcontinental Media G.P.
Transcontinental Media G.P.