Economic and global trade concerns are challenging organizations' ability to invest adequately in preparing for and protecting the continuity of their operations, according to findings from Aon's 2019 Global Risk Management Survey.
"Companies of all sizes are struggling to prioritize their risk management efforts amid so much change and uncertainty," said Rory Moloney, chief executive officer, Global Risk Consulting. "What was once a tried-and-true strategy for risk mitigation – using the past to predict the future – is now a challenge and coupled with a more competitive global economy, it is causing an all-time low level of risk readiness. As a result, risk management plans need to take a different approach than they have in the past."
Aon plc, the leading global professional services firm providing a broad range of risk, retirement and health solutions, surveys thousands of risk managers across 60 countries and 33 industries every two years to identify key risks and challenges their organizations are facing.
In the 2019 Global Risk Management Survey, respondents ranked economic slowdown as their No. 1 risk. Damage to reputation/brand was cited as the No. 2 concern, reflecting the potential for significant consequences when corporate mishaps occur amidst a 24/7 news cycle on social medial platforms. Accelerated rates of change in market factors stemming from an increase in protectionist international trade policies, which include rising regulatory activity and geopolitical tension, jumped from 38 in the previous survey to round out the top three concerns on the 2019 list.
Aon obtained responses for their 2019 Global Risk Management Survey in the fall of 2018, during a time of enormous uncertainty around the globe, fueled by stock market declines, trade policy disputes, aggressive regulatory actions, massive recalls, an active cycle of devastating natural disasters, far-reaching cyber-attacks and corporate scandals. These broader macro-economic risks, combined with the speed of technology change, are contributing to a growing prominence of new threats that can disrupt supply chains and overall business operations. As a result, one-third of the top 15 risks are new entrants to the top 15 list, including accelerated rates of change in market factors and disruptive technologies.
Risk managers are reporting their lowest level of risk readiness in 12 years, as many of the top risks, such as economic slowdown and increasing competition are uninsurable. As a result, risk managers need to embrace risk management as opposed to risk transfer in order to mitigate these threats and protect their organizations from potential volatility.
"The changes in this year's survey results indicate that the risk management function must evolve to reach the enterprise level," added Moloney. "This, combined with the use of data and predictive analytics that can generate actionable insights, will help businesses protect their bottom lines while adapting to accelerated change and economic fluctuations."
Additional Key Findings:
Participant profiles in Aon's 2019 Global Risk Management Survey encompassed small (below $1B USD), medium ($1B - $15B USD) and large (above $15B) organizations, including respondents from privately-owned companies, public organizations, government and not-for-profit entities. The full report can be accessed at www.aon.com/2019GlobalRisk.
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