Top 10 risk management concerns

For risk managers, everything represents a potential concern – from major incidents like floods or fires, to seemingly minor ones such as a change of personnel. But what issues are causing the most worry among risk managers this year? New research from insurance giant Aon sheds some light on the matter.

10. Property damage

Damage to business premises has a clear impact on productivity. At best, it will pose a fairly substantial inconvenience to a number of staff; at worst, it could mean the company in question is unable to deliver products or services on time, potentially harming hard-earned relationships with clients and suppliers.

9. Cyber risk

For the first time ever, cyber risk appeared in Aon’s list of top ten risk management concerns, highlighting its position as a growing risk factor. In fact, recent research from KPMG revealed that 79 per cent of businesses are expecting an upturn in the number of cyber security threats over the next 12 months.

8. Third-party liability

As well as ensuring their own operations are in order, businesses must be aware of their potential liability as a result of the actions of third parties, such as suppliers and clients.

7. Business interruption

Anything that affects a business’ ability to provide a minimum acceptable level of service delivery is a serious concern to risk managers. Failure to do so can damage relationships and hit a company’s bottom line.

6. Failure to innovate or meet customer needs

This risk retained its position at number six on the list, but was cited as the number one concern by firms in the technology industry. Across all sectors, it is expected to climb to number four in 2018.

5. Failure to attract or retain top talent

Recruitment and retention of top performers are serious concerns for risk managers, and for businesses in general. They pose a significant threat from a competition perspective; if a business has fewer quality employees than its rivals, it will struggle to outperform them.

4. Increasing competition

Tying in with many of the other risks on the list, growth in competition poses a substantial headache for risk managers. Indeed, Aon expects it to rise to number one in three years’ time.

3. Regulatory or legislative changes

Changes to regulation or legislation are largely out of the hands of businesses, but could have a huge impact on their operations. While the majority of these changes can be anticipated, adapting to them could still require significant effort and cost a great deal of money.

2. Economic slowdown or slow recovery

Issues surrounding the economy were most commonly cited by C-level respondents. The high placing of this risk factor illustrates that businesses have not forgotten about the credit crunch and are afraid that economic growth could slow again.

1. Damage to reputation or brand

Now more than ever, branding and reputation are vital for business success. Again, this risk factor ties in with many others on the list, including business interruption, property damage and failure to innovate. Perhaps most significantly, cyber crime has been regularly linked to reputation or brand damage in the wake of high-profile data breaches.

 

Rory Moloney, chief executive at Aon Global Risk Consulting, said: “While new risks such as cyber have moved to centre stage, established risks – like damage to reputation or brand – are taking on new dimensions and complexities.

 

“The interconnected nature of these risks reinforces the importance of strategic risk management in every organisation.”

 

Our Market Reports combine our review of the prevailing conditions in the risk management recruitment market together with the results of our 2015 employer survey.