Businesses identified economic and societal risks as most pressing with cyber risk becoming more important in a survey by Zurich Insurance Group and Marsh & McLennan Companies.
Unemployment, fiscal crises, and the failure of a nation's government to provide stability were the top risks identified by businesses globally while cyber risks rose in importance.
Executives' responses identified economic, geopolitical, social, and technological risks as likely to carry the greatest dangers for their businesses over the next 10 years.
John Scott, chief risk officer, commercial insurance, at Zurich, said of the findings, “Whilst economic growth and technological developments create new opportunities for business and countries, geopolitical risks and events have led to uncertainties which raise questions about how to manage resilience in uncertain times. It is essential for businesses to have clear risk management strategies in place, developing options for legal structures and operational choices which take account of uncertain policy outcomes. It's frustrating and resource intensive, but that's the kind of strategic thinking business needs, to deal with the uncertainty and to build resilience to the risks that might emerge in different scenarios. Looking at the survey results, it appears that in the medium-term, business leaders are focusing on social and economic risks, but shouldn't underestimate the potential impact of environmental and technological risks as well.”
John Drzik, the president of global risk and digital at Marsh & McLennan, said, “While the fragility of the global economic recovery remains the chief business concern, executives are increasingly worried about the potential for cyber and other technology-related risks to threaten their ability to operate. Business leaders in many of world's largest economies now rank cyber as their top risk. Companies need to rigorously analyze how these threats could impact their operations and take appropriate risk mitigation and resiliency measures.”
According to the survey, executives in most regions highlighted unemployment or “underemployment” and “fiscal crises” as the two greatest risks, although those in North America and East Asia and Pacific regions were most concerned by cyber attacks and asset bubbles.
Following an increase in geopolitical risk, sometimes fueled by protectionist policies, business leaders in Europe, South Asia, Latin America and the Caribbean, and Sub-Saharan Africa were worried about the potential failure of national governance.
In Europe, business leaders added “failure of financial mechanisms or institutions,” to the list of pressing risks. In South Asia, rapid growth in urban centers led executives in that region to highlight “failure of urban planning” and “failure of critical infrastructure” as among the key potential threats to their businesses.
Risks associated with the “failure of climate change adaptation” elicited very little concern among those deemed likely to pose the gravest threats over the next 10 years – out of the 20 economies surveyed, only Canadian executives put climate change in their top risks list, albeit ranking it lower than some other risks.
The survey found that the threat of potential terrorist attacks worried executives in North America and the Middle East and Northern Africa, but failed to make it to the top five risks ranking among businesses in the other regions.