Cyber is ranked as the number one risk globally according to Aon’s 2021 global risk management survey, as the COVID-19 pandemic has highlighted the increasing importance of being able to manage long-tail risks.
More than 2,300 respondents across 60 countries and 16 industries participated in the survey, which examined key risks and challenges faced by organisations in the current volatile business environment.
As the top current and predicted future risk (the highest it has ever ranked in the survey), cyber featured in the top 10 list of risks across each surveyed region, industry and respondent type.
It was followed in the global top 10 list by business interruption (BI), economic slowdown, commodity price risk, reputation, regulatory changes, pandemic/health risk, supply chain failure, increasing competition, and failure to innovate.
These risks collectively reflect the current landscape, as organisations are experiencing significant volatility as a result of the COVID-19 pandemic, which has caused many firms to shift their focus from event-based to impact-based risk assessments.
For example, Aon points out that BI is no longer regarded as a linear risk, as the pandemic demonstrated how the interconnectivity of risk means it can affect multiple industries and companies simultaneously.
BI ranked as the top risk in Europe and Asia Pacific, especially within the sectors of energy, utilities and natural resources, hospitality, travel and leisure, and life sciences.
Lambros Lambrou, CEO of Aon Commercial Risk Solutions, explains: “The world is a more volatile place and the importance of better decision-making has never been greater.”
“Long-tail risks are not single events — they are innately interconnected, as we have seen with the COVID-19 pandemic fundamentally changing the way the world works, revealing new risks and re-ordering priorities in the C-suite.”
Elsewhere, commodity price risk and scarcity of materials was highlighted as a predicted future top risk globally, particularly in the food, agribusiness and beverage, and industrials and manufacturing industries.
Aon’s survey also considers risk readiness, associated losses and mitigation actions currently implemented for each of the top 10 risks — only 29 per cent of respondents said they plan on increasing their investment level in risk management resources.
In addition, the survey examines risk management, assessment and mitigation techniques implemented by firms to fund their risk management programmes, as well as the key risks underwritten by captives.
Rory Moloney, chief operating officer for enterprise clients at Aon, adds: “Historically, risk managers and insurers have learned and made decisions by analysing data from loss events as they have occurred. This approach must evolve in order to proactively manage emerging exposures such as complex supply chains.”
“There is an increasing realisation of the need to address the ‘known unknowns’. As we face unprecedented events, the challenge will be how to best develop solutions to properly prepare for and manage through them.”
