Almost three quarters (72%) of business leaders believe that their businesses are not moving fast enough to address risks associated with global megatrends across trade, technology, weather and workforce, according to a recent survey by re/insurance broker, Aon.
Aon’s survey, which gathered insights from C-suite and business executives in North America, UK and Europe, found that 86% of business leaders believe that it is important to address the challenges and opportunities presented by these megatrends.
Moreover, the majority of the survey’s respondents identified all four megatrends as “extremely important” to their business.
A notable factor to highlight, data also reveals that trade, technology and workforce ranked as bigger priorities (with 80-plus percent of the respondents rating them as extremely important) while 70 percent of those surveyed ranked weather as a top-priority risk.
In terms of trade, business decision makers have said that risks which are linked to trade remain as some of their top concerns, both physical and financially.
Data from the survey shows that supply chain risks are top of mind in the C-suite, with 74% of business decision makers saying that their responsibility for supply chain or distribution functions has increased over the last year.
It’s also important to address, that while advancements in AI and data and analytics offer businesses a competitive edge, they also generate new and evolving risks too.
Data shows that business leaders clearly understand the importance of fully analysing and assessing risks associated with technology, with a staggering 63% reporting that they have measured the ROI of cyber security initiatives, and 61% auditing IT suppliers to manage third-party risks and IT sprawl within the last year.
Focusing attention on weather now, 66% of business decision makers said that they understand that climate issues raise new risks and vulnerabilities that require a major change in regards to how businesses think about the future.
Interestingly, compared with the other three megatrends, decision makers are slower to act on weather risk. While 59% of those surveyed are quantifying the financial impact of extreme weather, 72% are also reportedly carrying out the same exercise for cyber.
The survey also revealed that rising workforce costs are among the largest challenges that business decision makers are currently facing, with 57% saying their company has materially changed benefit or health care offerings for employees to improve affordability and improve outcome.
Just over half of respondents (52%) have reportedly taken action over the last year in reskilling or upskilling workers for the new demands of green technology and renewable projects, and 45% have also said that climate issues are helping create a “mission-driven culture that attracts and retains talent.”
Furthermore, data from the survey also reveals key differences in risk preparedness between organisations in the U.S. and those in Europe and the UK.
A good example, is how 48% of U.S. business decision makers named supply chain disruption as a top yrade risk, compared with 27% in the EU and UK.
However, 44% of decision makers in the EU and UK see war and political instability as a top trade risk, compared with just 28% in the U.S.
Aon CEO Greg Case, commented: “These findings confirm what we’re hearing from our clients every day – the world is more volatile and complex, creating uncertainty and need for new solutions across our global economy. Business decision makers recognize the enormity of the challenges presented by the megatrends of Trade, Technology, Weather and Workforce and they are looking for actionable insights and innovative tools to more quickly address critical risk and people issues.”
Aon reveals that responding to these megatrends risks is made more difficult by continued concern about macroeconomic and financial conditions.
This is clearly demonstrated with 77% of business decision makers revealing that they are concerned about interest rate fluctuations, and 73% revealing concerns about asset price volatility impacting their business in the next year.
Aon President Eric Andersen, said: “It’s clear that without taking action, business decision makers will not be able to effectively manage their exposures to these megatrends over the next year. As the megatrends grow more interconnected, businesses which adopt a comprehensive, data-driven, forward-looking approach to risk management will more confidently address challenges and seize opportunities amid uncertainty.”
