Reinsurance broker Aon Benfield has said firms are at their lowest levels for risk preparedness since 2007 – when it first began to assess the risk environment for businesses in its bi-annual global risk management survey.
This is down to firms not yet having caught up with the speed of the evolving risk landscape; Aon said firms are operating in a “new reality” where old risks have gained in complexity and urgency and new risks emerge to disrupt the modus operandi on every level.
Rory Moloney, chief executive officer for Aon Global Risk Consulting, said; “We are living in a challenging new reality for companies of all sizes around the world. There are many emerging influences that are creating opportunity, but at the same time, creating risks that need to be managed.”
“As the risk landscape for commerce evolves, businesses can no longer rely solely on traditional risk mitigation or risk transfer tactics. They must take a cross-functional approach to risk management and explore different ways to cope with these new complexities.”
Despite these challenges, Aon called the overarching business environment one of “cautious optimism” due to moderate economic growth – which has left firms less worried about an economic slowdown.
The number one business concern for firms is said to be exacerbated by social media; damage to reputation or brand; “While defective products, fraudulent business practices and corruption continue to be key threats to reputation, social media has greatly amplified their impact.”
Increased competition has moved up to third greatest perceived threat to business, Aon noted competition has become so complex that executives now struggle to identify in what industry and with which companies they are competing.
Impacting firms on various levels, the bi-annual survey found emerging technologies, innovation and interconnectivity and advancement of geopolitical, economic and demographics have amplified complexity to create a new reality for the business realm.
“Bi-annual survey finds economics, demographics and geopolitics as well as technology advancements creating new reality for companies around the world.”
Emerging risks that have moved up higher on the risk list include disruptive technologies, innovation, cyber and political risk.
Cyber risk has moved up dramatically “as the frequency of cyber breaches are increasing and incident response plans have become more complex due to regulation and mandatory disclosure obligations,” said Aon.
Disruptive technologies and innovation is an emerging risk currently ranked fairly low, at number 20 this year, but by 2020 its estimated to be in the top ten: “With the recent introduction and adoption of new technologies, such as drones, driverless cars and advanced robotics, businesses have an increased awareness of the impact of innovation.
“Respondents from several industries – not just the technology sector – realise the significance of potential disruptors from within their own industry as well as outside their industry,” said Aon.
Insurance and reinsurance broker Aon conducts its survey bi-annually, and released its findings for the global riskscape in 2017 after analysing input from 1,843 respondents from public and private companies from around the world.