Companies rate reputation and brand damage as biggest risk: Aon global survey

Cyber risk has entered the top 10 for the first time since the broker started its bi-annual survey in 2007. Of the top 10 risks in 2015, the first six are uninsurable. They survey finds that competition is to be top threat by 2018 with political and governance risks on the rise. The overall 2015 Aon risk ranking combines the opinions of 1418 risk professionals, C-suite executives and 'others'. Each of these three groups accounted for roughly one third of the total responses. Respondents were from organisations operating in 60 countries, 28 industry sectors and a mix of private and public companies. The biennial survey first took place in 2007.hideThe overall top 10 risks in 2015 and there movement since Aon's last survey in 2013 are: 1. Damage to reputation/brand +3 from 2013 2. Economic slowdown/slow recovery -1 from 2013 3. Regulatory/legislative changes -1 from 2013 4. Increasing competition -1 from 2013 5. Failure to attract or retain top talent = 2013 6. Failure to innovate/meet customer needs = 2013 7. Business interruption = 2013 8. Third party liability +5 from 2013 9. Cyber risk (computer crime/hacking/ viruses/malicious codes) +9 from 2013 10. Property damage +7 from 2013 Aon said that damage to reputation/brand placing as the number one risk reflects the fact that 'all risks lead to brand' in an increasingly interconnected world. It ranked as a top concern across almost all regions and industries. Economic slowdown/slow recovery, which has consistently ranked as the number-one risk facing companies worldwide since 2009, has slipped to number two in 2015. It remains the number one concern in Europe. Worldwide, the number of respondent organisations reporting loss of income in the preceding 12 months has dropped from 67% in 2013 to 46% in 2015. Aon said that as overall concerns over economic slowdown lift, organisations reveal a host of other daunting challenges driven by both external and internal factors in today's globally interdependent environment. While new risks such as cyber security have moved centre stage, old risks like damage to reputation/brand and increasing competition are taking on 'new dimensions and complexities', said Aon. The broker added that these constantly evolving and interconnected challenges have made risk management a 'necessity for survival and a key driver for success in this diverse, competitive and fragile marketplace'. Beyond the top 10 risks, notable climbers include D&O risk that ranked 20, up from 34 in 2013, and corporate social responsibility/sustainability up to 22 from 47 two years ago. Moving in the other direction political risk fell from 10 to 15. Stephen Cross, Chief Innovation Officer at Aon Risk Solutions, said: "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." Rory Moloney, Chief Executive Officer, Aon Global Risk Consulting, said the survey reveals a number of different challenges driven by today's globally interdependent environment. "While new risks such as cyber have moved to centre stage, established risks like damage to reputation or brand, are taking on new dimensions and complexities. The interconnected nature of these risks reinforces the importance of strategic risk management in every organisation," he said. Aon's 2015 Global Risk Management Survey not only asked respondents to rank current risks but to predict the likely top risks facing their companies in the next three years. The survey finds that increasing competition is expected to become the number one risk worldwide by 2018. Respondents predict that the current number one risk, damage to reputation/brand, will decline to number five by 2018 with political risk and corporate governance expected to emerge as top ten threats. Increasing competition is projected to jump from the current position of number four to number one. Meanwhile failure to innovate/meet customer needs is expected to rise from six to number four. Aon said that 'surprisingly' reputation/brand is projected to fall from the largest risk in 2015 to number five in 2018. According to respondents, business interruption will fall from number seven to number 12. Political risk is expected to mount over the next few years and rank number nine in 2018 having placed 15th this year. With the rise of ISIS and enduring conflicts in the Middle East, the exacerbating civil war in Ukraine and the territorial disputes between China and its Asian neighbours, Aon said it would have expected political risk to loom large in the 2015 ranking. But this omission is remedied in the projected list, it said. Survey respondents in certain regions expect political risk to climb the agenda further still. Regionally, political risk/uncertainties is ranked number five by respondents in Latin America and the Middle East and Africa-regions that Aon said are 'being roiled by political turmoil'. The growing burden and consequences of corporate governance/compliance is also likely to rise and ranks tenth in the projected 2018 list. Respondents believe computer crime/hacking/viruses/malicious codes will move up to the seventh ranked risk in 2018 from ninth this year. This reflects a growing 'concern about rampant data breaches that companies have been experiencing in recent years', said Aon. Commodity price risk, while not far off the radar at a current ranking of 11, is projected to take the number eight spot. The predicted change in the top ten risks between now and 2018 is as follows: 1) Damage to reputation/brand will fall to five 2) Economic slowdown/slow recovery will remain at two 3) Regulatory/legislative changes will remain at three 4) Increasing competition will rise to number one 5) Failure to attract or retain top talent will fall to six 6) Failure to innovate/meet customer needs will rise to four 7) Business interruption will fall to 12 8) Third-party liability will fall to 11 9) Computer crime/hacking/viruses/malicious codes will rise to seven 10) Property damage will fall to 16

Companies rate reputation and brand damage as biggest risk: Aon global survey

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