A new study by Aon has warned that a focus on resolving the immediate challenges posed by the COVID-19 pandemic may be compromising re/insurers’ longer-term plans and goals.
The 2021 edition of Aon’s Global Risk Management Survey found that cyber risk topped the list as the number one current and predicted future risk globally, its highest rank since the inception of the survey.
The top 10 risks also strongly reflected the current landscape, namely COVID-19 and its impact on organizations.
Amidst a backdrop of challenging market conditions, Aon notes that organizations are shifting their focus from event-based to impact-based risk assessments.
“The world is a more volatile place and the importance of better decision making has never been greater,” said Lambros Lambrou, Aon’s CEO of Commercial Risk Solutions.
“Long-tail risks are not single events. They’re innately interconnected, as we’ve seen with the COVID-19 pandemic fundamentally changing the way the world works, revealing new risks and re-ordering priorities in the C-suite. A preoccupation with managing these immediate risks may be compromising firms’ ability to invest in the risks of tomorrow.”
In order, the top 10 risks were found to be cyber attacks, business interruption, economic slowdown, commodity price risk, damage to reputation, regulatory changes, pandemic risk, supply chain failure, increasing competition, and failure to innovate or meet customer needs.
“Historically, risk managers and insurers have learned and made decisions by analyzing data from loss events as they have occurred. This approach must evolve in order to proactively manage emerging exposures such as complex supply chains; we can’t rely solely on the past to inform future risks,” said Rory Moloney, Chief Operating Officer for Enterprise Clients at Aon.
“Several of the top risks identified in this year’s survey highlight four key areas of client need Opens in a new tab we’ve identified, particularly unmet needs in the form of long-tail risks that are no longer on the horizon. Those risks are on our doorstep,” Moloney continued.
“There is an increasing realization of the need to address these ‘known unknowns.’ As we face unprecedented events, the challenge will be how to best develop solutions to properly prepare for and manage through them.”