- Cyber risk topped the list as the number one risk globally
- Long-tail risks have become an important part of the risk
landscape
- COVID-19 has highlighted the interconnectivity of risk
LONDON, Oct. 26, 2021 /PRNewswire/ -- Aon plc (NYSE:
AON), a leading global professional services firm, today announced
the results of its 2021 Global Risk Management Survey, which
gathers input from thousands of risk managers across 60 countries
and 16 industries every two years to identify key risks and
challenges their organizations are facing. The past two years have
proved to be incredibly volatile, with the global COVID-19 pandemic
having had a ripple effect across other types of risk, such as
heightened awareness of reputation and cyber, as long-tail risks
have become increasingly important to manage.
The 2021 edition surveyed more than 2,300 respondents in 60
countries across 16 industries at both public and private
companies. With more emphasis and reliance on technology, cyber
risk topped the list as the number one current and predicted future
risk globally, its highest rank since the inception of the survey.
Cyber was also cited in the top 10 list of risks across each
region, industry and respondent type.
The top 10 risks also strongly reflect the current landscape,
namely COVID-19 and its impact on organizations. Amidst a backdrop
of challenging market conditions, this is testing the ability of
firms to manage volatility and make better decisions. Organizations
are shifting their focus from event-based to impact-based risk
assessments: for example, business interruption was once seen as a
linear risk, but the COVID-19 pandemic has demonstrated how it can
affect multiple industries and companies simultaneously and
globally.
"The world is a more volatile place and the importance of better
decision making has never been greater," said Lambros Lambrou, Aon's CEO of Commercial Risk
Solutions. "Long-tail risks are not single events. They're innately
interconnected, as we've seen with the COVID-19 pandemic
fundamentally changing the way the world works, revealing new risks
and re-ordering priorities in the C-suite. A preoccupation with
managing these immediate risks may be compromising firms' ability
to invest in the risks of tomorrow."
Exacerbated by the COVID-19 pandemic, and highlighting the
interconnectivity of risk, the top 10 global risks according to the
2021 Global Risk Management Survey are:
- Cyber Attacks/Data Breaches
- Business Interruption
- Economic Slowdown/Slow Recovery
- Commodity Price Risk/Scarcity of Materials
- Damage to Reputation/Brand
- Regulatory/Legislative Changes
- Pandemic Risk/Health Crises
- Supply Chain or Distribution Failure
- Increasing Competition
- Failure to Innovate/Meet Customer Needs
"Historically, risk managers and insurers have learned and made
decisions by analyzing data from loss events as they have occurred.
This approach must evolve in order to proactively manage emerging
exposures such as complex supply chains; we can't rely solely on
the past to inform future risks," said Rory
Moloney, Chief Operating Officer for Enterprise Clients at
Aon. "Several of the top risks identified in this year's survey
highlight four key areas of client need we've identified,
particularly unmet needs in the form of long-tail risks that are no
longer on the horizon. Those risks are on our doorstep. There is an
increasing realization of the need to address these 'known
unknowns.' As we face unprecedented events, the challenge will be
how to best develop solutions to properly prepare for and manage
through them."
The report highlights the top 10 risks by industry and region,
as well as risk readiness, associated losses and mitigation actions
for each of the top 10 risks. In addition, the report includes the
predicted top 10 risks in the next three years and Aon's analysis
of underrated risks. Highlights of key findings by region and
industry include:
- Pandemic Risk/Health Crises risk jumped to number seven, up
from number 60 in the 2019 survey, and was listed in the top 10 for
every region except North
America.
- Business Interruption ranked as the second-highest threat
globally — and respondents in some geographies (Asia Pacific and Europe) ranked it as the number one risk.
- Commodity Price Risk/Scarcity of Materials is a predicted
future top risk globally.
- Four risks consistently ranked in the top 10 risks in each
region: Cyber Attacks/Data Breaches, Business Interruption,
Economic Slowdown/Slow Recovery and Regulatory/Legislative
Changes.
- Supply chain or distribution failure re-entered the top 10 and
ranked highest in Europe and
North America, in large part to
its linkage to the pandemic and geopolitical impact. Though not a
top global risk, workforce scarcity and retention issues ranked
highly in Asia Pacific and
North America.
- Energy, Utilities & Natural Resources; Hospitality, Travel
& Leisure and Life Sciences ranked Business Interruption as the
number one risk.
- Commodity Price Risk/Scarcity of Materials was ranked as the
number one risk by respondents in the Food, Agribusiness &
Beverage and Industrials & Manufacturing industries. It's
predicted to rise to the top five both globally and in Europe by 2024.
The 2021 Global Risk Management Survey also includes a deep dive
on key issues, including risk management and assessment techniques,
controls and mitigation and key risks underwritten by captives.
Additional findings from the survey include:
- The 2019 survey revealed that global businesses had the lowest
risk preparedness scores in 12 years, averaging 53 percent
globally. According to the 2021 survey, despite increases in
reported levels of risk readiness for traditional risks, growing
volatility and the changing nature of top 10 risks led to the
highest ever reported loss of income for businesses.
- Though businesses didn't list climate change as a top risk
(number 29), it's inherently tied to other, more tangible risks,
where the immediate impact is measurable – such as business
interruption, material scarcity, damage to reputation, regulatory
changes and supply chain issues, which are all top 10 risks.
Another underrated risk, Environmental, Social and Governance
(ESG), ranked at number 31, up from number 39 in 2019. ESG is
predicted to enter the top 15 risks globally in the next three
years.
- Only 29 percent of survey respondents plan on increasing their
investment level in risk management resources.
Conducted every two years since 2007, Aon's Global Risk
Management Survey provides data and insights to enable better
decision making around risk in an increasingly volatile and complex
business environment. The full report is available here.
About Aon
Aon plc (NYSE: AON) exists to shape
decisions for the better — to protect and enrich the lives of
people around the world. Our colleagues provide our clients in over
120 countries with advice and solutions that give them the clarity
and confidence to make better decisions to protect and grow their
business.
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News Alerts here.
Media Contact
Nadine Youssef
mediainquiries@aon.com
+1 833 751 8114
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