Cyber risk lands in the top ten for the first time in Aon’s latest global risk survey, according to Aon Risk Solutions.
Damage to brand and reputation was cited as the top overall concern facing global organizations, further underscoring the increasing importance of cyber risk as it has been regularly linked to brand and reputation issues in the wake of data breaches.
The top 10 risks are:
- Damage to reputation/brand.
- Economic slowdown/slow recovery.
- Regulatory/legislative changes.
- Increasing competition.
- Failure to attract or retain top talent.
- Failure to innovate/meet customer needs.
- Business interruption.
- Third party liability.
- Cyber risk (computer crime/hacking/ viruses/malicious codes).
- Property damage.
Aon’s global clients strongly felt that damage to brand and reputation ranked as a top concern across almost all regions and industries. This can be attributed to the growing challenges businesses are facing as a result of the top 10 risks, such as cyber risk, but also including business interruption, property damage and failure to innovate.
Failure to innovate/meet customer needs remained at the sixth spot on Aon’s 2015 Global Risk Management Survey and is projected to rank at four in 2018. Respondents in the technology industry indicated that this is the most significant risk to their business. The threat severity of this risk tied to increasing competition, which is expected to top the list in three years, raises a red flag for the insurance industry.
Property damage also re-entered the top 10 global risk list for the first time since 2007, up from 17 in 2013. This risk was ranked highest by hotels and hospitality, non-aviation transportation and real estate. Unprecedented weather events in recent years have bundled this risk with the cause and effect of business interruption, which took the seventh spot on the 2015 list with reported losses down more than 10 percent from the 2013 survey.
The 1400 survey respondents to the Aon Global Risk Management Survey included CEOs, CFOs and risk managers providing comparative insight into different perceptions of risk.
Typically, financial and economic risks including commodity price risk, economic slowdown and technology failure were seen as damaging at C-suite level with risk managers focused on liability-related risks such as cyber, property damage and third party liability.
“The insights provided by this survey help us understand how risks are changing as the global environment evolves. It’s little surprise to see cyber risk enter the top 10 at the same time we are seeing increasing concern about corporate reputation as the two issues are a great example of the interconnectivity of risk. What is surprising was the lack of alignment between the Board and the risk manager,” said Stephen Cross, chief innovation officer for Aon Risk Solutions. “Such diverse views illustrate how imperative it is that the board of directors have effective and regular communication with risk managers to effectively assess and mitigate the company’s risk exposure.”
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