Less than two thirds (59%) of business executives worldwide are currently confident about the ability of their companies to grow and prosper, with 82% feeling they operate in a moderate to high risk environment, according to the latest edition of CNA Hardy’s Risk and Confidence Survey.
Responses varied significantly by region, with 70% of leaders in Continental Europe expressing confidence, ahead of those in North America (64%), Asia Pacific (53%) and the UK (39%).
The majority of business leaders across most regions ranked economic risk as their primary concern, CNA Hardy found, ahead of cyber (19%), technology (53%) and political risk (13%).
“Economic risk is top of the leader board in every region bar Continental Europe and it hits business confidence hardest where organisations feel they have most to lose – namely in the UK where Brexit is paralysing decision-making and in Asia where trade wars are distorting trade patterns,” noted Dave Brosnan, Chief Executive Officer (CEO) of CNA Hardy.
“By contrast, in North America and Continental Europe, comparatively strong economic growth means business leaders are far more confident, despite the overall sense that they are operating in a moderate to high risk environment.”
The survey also found that executives in every single region were prioritising international expansion to fuel growth, regardless of their confidence levels.
“While this bullish approach is positive from a business perspective, growth should be treated with caution,” Brosnan said. “Increasingly protectionist economic policy could undermine companies’ international growth ambitions. Executing a global growth strategy is much harder against political and economic headwinds.”
CNA Hardy also observed a shift in investment priorities, with most companies (74%) now prioritising technology spending over research and development (70%) to support topline growth.
“As technology becomes ever more critical and embedded, so managing it becomes harder and the risk of getting it wrong increases,” Brosnan explained. “Greater dependence inevitably paves the way for greater cyber exposure and other technology-related risks. It is an inescapable but vicious circle.”
Half of the large companies (turnover in excess of $1.3 billion) surveyed by CNA Hardy said that cyber risk is likely to increase and potentially become the top risk globally, although only 36% of small companies and 45% of mid-sized companies agreed.
“Our data suggests that SMEs are not viewing cyber as a priority as they appear to feel less vulnerable to the risk,” said Brosnan. “This is a false impression, and insurers need to do more to highlight the risk of cyber to businesses of all sizes.”
Based on the results, CNA Hardy recommended that companies diversify their range of skills to help identify and manage the threat to brand reputation and embed a more proactive approach to loss and risk prevention, with stronger leadership team making strategic investments in technology, people and processes that will enable growth.
“Leadership, culture and strategy are key as insurers get better at understanding and responding to these risks and communicating what needs to change,” Brosnan continued. “Risk management is as much about service and support as it is about balance sheet risk transfer, and for that to work effectively there has to be better dialogue between clients and the industry.”
