Economic and global trade concerns are challenging organizations' 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 prioritize their risk management efforts amid so much change and uncertainty,” said Rory Moloney, chief executive officer for global risk consulting. “What was once a tried-and-true strategy for risk mitigation – using the past to predict the future – is now a challenge 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 than they have in the past.”
In Aon's new survey, respondents ranked economic slowdown as their top risk. Damage to reputation/brand was cited next, reflecting the potential for significant consequences when corporate mishaps occurred amidst a 24/7 news cycle on social medial platforms. Accelerated rates of change in market factors stemming from an increase in protectionist international trade policies, including rising regulatory activity and geopolitical tension, jumped from number 38 in the previous survey to round out the top three concerns on the 2019 list.
Aon obtained responses for its survey in the fall of 2018, and one-third of the top 15 risks were new entrants to the top 15 list, including accelerated rates of change in market factors and disruptive technologies.
Risk managers reported 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, Aon said, risk managers need to embrace risk management as opposed to risk transfer in order to mitigate these threats and protect their organizations from potential volatility.
“The changes in this year's survey results indicate that the risk management function must evolve to reach the enterprise level,” added 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.”
Additional findings of the Aon survey included:
- Aging workforce rose from a ranking of 37 in 2017 to 20 in 2019. Aon predicted it to rise to 13 by 2022. Overall, aging populations coupled with workforce shortages not only change the social and economic trajectory of a country, but also create volatility within organizations.
- Climate change moved from a ranking of 45 in 2017 to 31 in 2019, as the frequency and severity of natural catastrophes contributed to rising concerns about the impact on the global economy.
- Cyber-attacks/data breaches ranked as the number six risk and Aon expected that to jump to the third-highest overall risk in 2022. Cyber continued to hold the top spot among those responding from North America. For the first time, cyber risk was predicted to be in the top-10 list for Latin America. It also was predicted to rise in Europe from a ranking of eight to four, and in the Middle East and Africa from eight to two.
- Disruptive technologies were a growing concern for survey respondents, rising from a ranking of 20 in 2017 to 14 in 2019 globally. This trend was cited as a top-10 risk for 50 percent of all industry sectors.
Learn more: www.aon.com/2019GlobalRisk.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].