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The pandemic has been a highly unpredictable time for risk managers and also has revealed how much their risks may be interconnected. AON, a global professional services firm, recently surveyed more than 2,300 respondents in 60 countries about the top 10 risks they face.
"The world is a more volatile place, and the importance of better decision making has never been greater," said Lambros Lambrou, CEO of commercial risk solutions for AON.
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"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 reordering priorities in the C-suite. A preoccupation with managing these immediate risks may be compromising firms' ability to invest in the risks of tomorrow."
The top 10 global risks according to the 2021 Global Risk Management Survey are:
- Cyberattacks and data breaches
- Business interruption
- Economic slowdown and slow recovery
- Commodity price risks and scarcity of materials
- Damage to reputation and brand
- Regulatory and legislative changes
- Pandemic risks and health crises
- Supply chain or distribution failure
- Increasing competition
- Failure to innovate or meet customer needs
"Historically, risk managers and insurers have learned and made decisions by analyzing data from loss events as they have occurred," said Rory Moloney, COO for enterprise clients at Aon.
"This approach must evolve to proactively manage emerging exposures such as complex supply chains; we can't rely solely on the past to inform future risks. Several of the top risks identified in this year's survey 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."
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. Only 29 percent of survey respondents plan to increase their investment in risk-management resources.
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
