Aon warns on brand complacency

As the automotive sector looks set to follow banks in suffering reputational damage as a result of poor conduct, a survey from the broker has found that only 54% of captive executive directors in Europe, Middle East and Africa believe that reputation and brand damage should be their number one concern. Only 35% in the Americas felt the same. Launching its Underrated Threats Report 2015 at the Ferma Forum, Aon said that damage to reputation should be viewed as a significant business risk, yet only 44% of executive and non-executive captive directors surveyed agreed with this. “Damage to brand and reputation can become a significant business risk,” said Rory Moloney, CEO of Aon Global Risk Consulting. “The speed of technological advancement, coupled with societal, economic and political changes means that reputational damage is an increasing concern,” he said.hideDamage to reputation was the number one risk identified in Aon’s 2015 Global Risk Management Survey. Many of the factors driving damage to brand and reputation—such as social media and unethical behaviour—were ranked very low in this report. In addition to reputation and brand, Aon identifies several other underrated risk themes, including risk connectivity, cyber risk, political risk and increasing competition. Some 80% of survey respondents believe that the interconnectivity of risk is still not widely understood, while some 90% believe that cyber risk is not fully understood. 78% of captive executives believe that cyber risk preparedness is vastly overstated. “Cyber risk is no longer considered an emerging risk, but its rapidly changing nature still confounds many. A few years ago, it was criminals aiming predominantly at financial gain by stealing personal and company data. Now, extremist groups use cybercrime techniques to damage companies’ and governments’ reputations by stealing and publishing confidential information,” said Aon. “As motivations for cyber-attacks have evolved, so has their effect, creating additional layers of new, interconnected risks,” it added. Also of concern is the fact that some 58% of surveyed companies said they have not completed a cyber risk assessment. Aon also warned of the potential for catastrophic cyber loss. “One of the dangers facing the insurance industry is the potential for a cyber hurricane, an event that could impact multiple lines of businesses, geographies and industry sectors,” Aon said in its survey report. “This could signify major risks and challenges since it will not be long before we could see the first multi-billion, cross-class cyber event,” it added. Political risk was also viewed as a significant threat, albeit to a lower extent. 63% of respondents felt that political risk had been seriously underrated. Unsurprisingly, ongoing uncertainty across the eurozone and various geopolitical conflicts is a serious concern to executives in Europe, Middle East and Africa. However, despite rising threats, political risks dropped out of the top 10 risk list in Aon’s 2015 Global Risk Management Survey. The underrated risks survey concluded that it is imperative for senior executives and boards of directors to communicate with risk managers and take an active role in assessing and covering a company’s risk exposure. Some 70% of surveyed captive directors agreed with Aon’s assessment. Stephen Cross, Chief Innovation Officer, Aon Risk Solutions, commented on the findings: “The interconnectivity of traditional and emerging risks means organisations can no longer evaluate individual risks in isolation but must look at all the top risks and people in a more holistic way.”

Aon warns on brand complacency

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