Aon has recently released its 2017 Global Risk Management Survey indicating risk trends and insights, based on a survey of over 2000 risk decision makers from more than 33 industry sectors and 60 countries globally.
Responding risk managers, CROs and CFOs provided feedback and insight on their insurance and risk management choices, interests and concerns in relation to quantitative and qualitative risk issues.
The survey reports damage to reputation as the biggest global risk for 2017. This is said to reflect an explosion in the number of product scandals and recalls, the effects of which have been felt more intensely by organisations due to the ease with which the issues become newsworthy through social media platforms. This ‘new face’ to an old risk is particularly significant given the popularity of class actions in Australia and the ease with which customer complaints can gain traction online, turning critical events into uncontrollable crises. This risk is forecast to remain in top place for the next 3 years.
Risks to watch
In terms of the risks to watch, failure to innovate/meet customer needs is currently number 6 on the list overall and number 1 in the life sciences, printing and publishing, rubber, plastics, stone and cement and technology industries. By 2020, it is expected to be the top risk for the insurance industry and number 3 overall. Disruptive technologies/innovation (not currently in the top 10) is projected to come in at number 10 by 2020.
With both failure to innovate and innovation itself projected to be recognised as major risks within the next few years, it is clear that companies see the need to prepare for some serious adjustments to survive the innovation revolution. We can expect to see companies strive to implement innovation internally, while also keeping up with the innovations of competitors and disruptors.
Movers and new entrants to the risk list
Political risk/uncertainties has made its way into the top ten, and cyber risk has entered the top five. These two risks seem to have influenced each other’s upwards climb in the ranks as cyber-crime events during 2016 were perceived to have directly impacted government institutions, political parties and global infrastructure, driving up the risk perception of both.
New entrants to the list are disruptive technologies/innovation (coming in at number 20); and major project failure ranked at number 15 (and 10 in the Asia Pacific).
Another emerging trend is the correlation between the failure to innovate and the failure to attract and retain top talent, highlighting the pressure for organisations to innovate to ensure that top talent and productivity are maximised.
For now, the ten top ranked risks globally are:
- Damage to reputation/brand
- Economic slowdown/slow recovery
- Increasing competition
- Regulatory/legislative changes
- Cyber-crime/hacking viruses/malicious codes
- Failure to innovate/meet customer needs
- Failure to attract or retain top talent
- Business interruption
- Political risk/uncertainties
- Third party liability (inc. E&O)
For more detail on the report click here, or keep an eye out for our further industry updates which will look at each of the risk categories in more detail.