As companies dig out from the worst recession since the 1930s, business leaders continue to feel the threat of sustained economic trouble.
This persistent concern is front and center in Aon's 2011 Global Risk Management Survey, which polled nearly 1,000 business professionals from 58 countries. The survey found that the economic slowdown is the number one risk facing organizations across all geographies, with 67 percent of respondents reporting loss of income in the last 12 months associated with this risk.
In another interesting highlight from the study, failure to innovate/meet customer needs made the top 10 list of global risks for the first time in the history of the study, debuting at number six. This development reflects growing concern about the risk of losing market share to more forward-looking competitors. What's more, technology failure/system failure also earned its first top 10 spot, ranking ninth on the list. Technology concerns lead to fears about additional risks, including business interruption and damage to brand, which are also found to be top of mind for survey respondents.
Here's the complete list of Aon's 2011 Global Risk Management Survey Top 10 Risks:
1. Economic slowdown
2. Regulatory/legislative changes
3. Increasing competition
4. Damage to reputation/brand
5. Business interruption
6. Failure to innovate/meet customer needs
7. Failure to attract or retain top talent
8. Commodity price risk
9. Technology failure/system failure
10. Cash flow/liquidity risk
The survey also showed that:
Only 39 percent of respondents measured their total cost of risk that's down from 44 percent in 2009. Failure to track or manage all aspects of TCOR could be detrimental to an organization in the long term. As the economy recovers and the soft market dissipates, more organizations are expected to track TCOR.
The chief risk officer role is a growing trend. Nearly one-third (31 percent) of respondents reported having a CRO, up from 25 percent in 2009. According to Aon, this finding represents the realized value of having risk officers in the c-suite and the emerging acceptance of risk management as a core function of business success.
For the third straight survey, financial stability was cited as the top criterion in an organization's choice of insurers. The desire for competitive pricing was tempered this year by an interest in dealing with carriers that have the financial capacity to pay claims.
As companies struggle to contain cost in a post-recession era, they are more willing to sacrifice flexibility and innovation for broader coverage and better terms and conditions.
"The findings shared in our report underscore the undeniable interdependence among various risks as well as economies around the globe," George Zsolnay, head of Aon Analytics in the US, said. "It is more important than ever for organizations to embrace an enterprise-wide approach to managing risk, and optimize their strategy on a global basis."