Reputational damage to the company/brand remains the top perceived risk for companies globally. While instances of defective products, fraudulent business practices or incidents of corruption continue to be serious threats to a company's reputation, social media has further magnified their impact, making them even more vulnerable. This is what emerges from the latest Aon Global Risk Management Survey, a two-year study on the main risks perceived for the business conducted in 64 countries by interviewing 1.843 managers of public and private companies belonging to 33 sectors. The main countries that have joined by level of members are 1) the United States, 2) Italy and 3) Poland, with the most represented sectors of construction, insurance, investment and finance and energy/utilities.
In Italy, with 390 managers who participated in the Aon survey, the economic crisis/slow recovery ranks first, followed by 1) damage to reputation/brand; 2) increased competition 3) liability of directors; 4) lack of ability to innovate/satisfy customer needs; 5) liability towards third parties; 6) counterparty credit risk, absent from the global top 7; 10) damage to property; 8) Business Interruption; and 9) Regulatory/Legislative Changes.
From the survey conducted in the last quarter of 2016 for 55% in Europe, 25% in North America, 10% in Latin America, 6% in Asia and 5% in the Middle East and Africa, it also emerges that traditionally uninsurable risks (such as brand reputation, interest rate fluctuations, etc.) are becoming even more volatile and difficult to manage and mitigate.
Cybercrime has seen a sharp rise in the ranking globally, moving from 9th to 5th position in the 2017 edition. Cybercrime is now the main concern for companies in North America, given that the frequency of cyber attacks is increasing and the plans for their management have become increasingly complex, due to regulation and reporting obligations.
This mandatory reporting trend is seen internationally, for example in Europe with the European Union's data protection regulations coming into force in 2018. Cybersecurity concerns will therefore continue to be of great importance to the companies.
Risks related to political uncertainties, which were in 15th place in the past edition, have re-entered the top 10 in 9th position. At the same time, the readiness to face risks has decreased, going from 39% in 2015 to 27% today. It should be noted that the countries of the most advanced economies, which have traditionally been associated with political stability, are perceived as new sources of volatility and uncertainty, constituting a concern for companies, especially for those operating in emerging markets. Furthermore, according to the 2017 edition of Aon's Political Risk, Terrorism and Violence Risk Map, protectionism in trade is on the rise, while incidents of terrorism and violence related to political events are the highest since 2013 .
“We are living in a new reality filled with challenges for businesses from all over the world and of all sizes. There are new trends that are emerging creating new business opportunities, but at the same time they bring with them new risks that need to be managed,” said Rory Moloney, CEO of Aon Global Risk Consulting. “As the business risk landscape evolves, organizations can no longer rely solely on traditional risk mitigation tools or current risk transfer practices. They must involve different business functions in risk management and explore different ways to deal with the new complexities”.
“Also in this edition, Italy is one of the main countries in terms of participation level and the most represented sectors are energy/utilities, banks and the consumer goods industry. Unlike what has emerged in other geographical areas, it is the economic crisis and the slow recovery that represent the main risk perceived in Italy, the one that has led to the greatest loss of profits in the last 12 months for companies. Credit risk remains a major concern, in 7th place, while globally it is only in 22nd place,” said Enrico Vanin, CEO of Aon SpA and Aon Hewitt Risk & Consulting. “In our country, cybercrime, which for companies in North America is the first absolute risk, ranks 11th. Only a small percentage of Italian managers have ever carried out a formal cyber risk assessment process or adopted insurance coverage”.
New technologies and innovation are an emerging risk that executives surveyed currently rank 20th, but see entering the top 10 risk by 2020. With the recent adoption of new technologies, such as drones, driverless cars and advanced robotics/automation, companies have become more aware of the impact of innovation.
THE TOP 10 RISKS OF THE 2017 EDITION AT A GLOBAL LEVEL
1. Reputation/brand damage
2. Economic crisis/slow recovery
3. Increased competition
4. Regulatory/legislative changes
5. Cyber crime/hacking/computer viruses/malicious code
6. Lack of ability to innovate/satisfy customer needs
7. Inability to attract or retain talent
8. Business Interruption
9. Political risk
10. Responsibility towards third parties
