A new report by insurance broker Marsh claims that the majority of large and midsize organisations continue to disregard the rising threat posed by a range of emerging risks, overlooking the impact these could have on their businesses.
Based on a global survey of nearly 1,000 organisations, the report picked up large disparities in the perception of and response to threats posed by pandemic, cyberattack, emerging technologies, along with climate change/ESG related issues, regulatory changes, and geopolitical risks.
The report showed that 75% of the participants believe that their risk management and insurance buying processes are aligned to their long-term growth strategies, with only 25% having a comprehensive or formal process in place to evaluate and model the impact of these emerging risks on their business.
It also suggests a significant perception gap with firms’ risk management functions prioritising short-term threats over those that are high severity but lower frequency.
This potentially leaves them vulnerable to immediate and long-term disruptions to their operations, assets, and revenue streams, the report concludes.
As new challenges continue to emerge, and the risk landscape grows increasingly complex, the report identifies the competitive advantage that risk resilient firms can gain.
A risk resilient organisation is able to anticipate risk, minimise losses, and quickly resume business as usual following an event, gaining a competitive advantage over less-prepared peers through growth opportunities seized during times of operational and/or financial stress, the report notes.
John Doyle, President and CEO, Marsh commented: “The COVID-19 crisis, the temporary closure of the Suez Canal, major cyber-attacks, and other recent events, have all exposed the fragility of global systems and serious shortcomings in organisations’ preparedness to manage major crises.
“As our report outlines, effective strategies to build more resilient businesses will not only facilitate faster recovery but also increasingly become a competitive advantage.
“Our survey findings show that more work needs to be done when it comes to anticipating and modelling key emerging risks as they develop. Resiliency is a journey that organisations need to prioritise,” he continued.