Aon reveals top 10 risks in Australia

Aon reveals top 10 risks in Australia | Insurance Business Australia

Aon reveals top 10 risks in Australia

Broking giant Aon has revealed the biggest risks currently facing businesses around the world – and it seems reputation is top of mind for many Australian firms.

Released yesterday, the biannual Global Risk Management Survey found Australian businesses are most concerned about sustaining damage to their brand, with the issue topping the rankings.

“The prevalence of social media and the 24/7 news cycle has the potential to create rapid contagion and this can have an immediate and lasting impact on an organisation’s shareholder value and reputation,” said Bruce Gordon, managing director for large clients at Aon Australia.

The top 10 list for Australia also different from the global ranking, which placed economic slowdown highest, followed by brand damage and accelerated rates of change.

Rank

Australia

Global

1

Damage to brand or reputation

Economic slowdown/slow recovery

2

Economic slowdown/slow recovery

Damage to reputation / brand

3

Business interruption

Accelerated rates of change in market factors

4

Increasing competition

Business interruption

5

Cyber-attacks/data breach

Increasing competition

6

Cash flow and liquidity

Cyber-attacks/data breach

7

Failure to attract or retain top talent

Commodity price risk

8

Failure to innovate / meet customer needs

Cash flow/liquidity risk

9

Regulatory/legislative changes

Failure to innovate/meet customer needs

10

Accelerated rates of change in market factors

Regulatory/legislative changes

A newcomer to the top 10 was accelerated rates of change, which placed in both the Australian and global rankings, coming in at tenth and third respectively.

Incredibly, the risk category climbed from number 38 in 2017’s global rankings to number three this year – a movement which clearly reflects the more turbulent times we’re currently going through.  

“The re-emergence of protectionist international trade policies, growing geopolitical tension, financial market volatility and rapid technological advancement have put Australian business leaders on alert in an environment where they are already witnessing slowed economic growth, a weaker Australian dollar and the fallout from the Hayne Royal Commission,” said Gordon.

When comparing Australia’s top 10 risks of 2019 to those identified in 2017, there are also some interesting changes in the line-up.

Rank

2019

2017

1

Damage to brand or reputation

Regulatory or legislative changes

2

Economic slowdown/slow recovery

Damage to brand or reputation

3

Business interruption

Increasing competition

4

Increasing competition

 

Failure to innovate / meet customer needs

5

Cyber-attacks/data breach

 

Cyber-attacks / data breach

6

Cash flow/liquidity risk

Major project failure

7

Failure to attract or retain top talent

Failure to attract or retain top talent

8

Failure to innovate / meet customer needs

Economic slowdown/slow recovery

9

Regulatory / legislative changes

Business interruption

10

Accelerated rates of change in market factors

IT lack of tech infrastructure

Interestingly, 2017’s top risk – regulatory and legislative change – dropped to ninth this year and Gordon noted that the significant movement may indicate increased resilience from Australian business leaders around the issue.

“Despite an upcoming federal election, this risk has receded as a concern to local business,” he said. “[This] may reflect how business leaders have adapted and accepted accelerated rates of change in political leadership as the new norm.”

Gordon also pointed out that economic slowdown had climbed the rankings, emerging as the second-highest risk facing Australian businesses.

“Despite it being more than a quarter of a century since the last Australian recession, fears for the domestic economy, fuelled by the decline in the property market and electoral uncertainty, have pushed this risk up six places since the 2017 survey,” he said. “The public perception of harm may be an influencer on business beliefs, with concerns as to an economic slowdown acting as a lead rather than a lag indicator.”

Failure to attract or retain top talent remained a top 10 concern for Australian business, coming in at number seven, unchanged on 2017 – however, the issue does appear to be posing less of a risk for the rest of the world.

“Australian businesses are finding themselves operating in a difficult environment, with recent changes to sponsored employment visas limiting organisations’ ability to source top talent from overseas,” he said.

“It therefore comes as no surprise that this risk issue should rank higher in the consciousness of Australian business leaders.”