Reputational risk tops list of concerns, risk managers warned

In a new study, Underrated Threats, Aon suggested: “Predictably unpredictable defines the current world of risk. Seeing what lies ahead requires a perspective on the forces that drive change, that motivate innovation, that push the neverending quest for exponential growth. “In an increasingly hyper-connected world this manic pace of change adjusts the risk landscape at an alarming rate.”hideIts research included a look at: Damage to brand & reputation: In 2013, participants in Aon’s Global Risk Management Survey projected damage to brand and reputation would be at number eight on the top risk list in 2015. However, damage to brand and reputation has actually jumped to number one in this year’s risk rankings. However, Aon said: “To our consternation, only 44% of executive and non-executive directors in our research believe the risk of damage to reputation and brand is rightfully in the top spot. “Such a response could indicate a positive trend—the recent high profile cases have prompted organisations to develop better proactive measures, response mechanisms, and procedures to manage reputational risks.” It suggested it was highly likely corporate executives have not realised the impact of reputational risk on a company’s bottom line and tend to believe corporate reputation only requires attention when a public relations disaster has already surfaced. Recent research done by a consulting firm showed only 19% of surveyed executives would award their companies an A-grade for their capability of protecting against and responding to reputation risks. About 39% rated the maturity of their reputation risk management programmes as either average or below average. Political risk/uncertainties: Political risk/uncertainties, at number 10 in 2013, was projected to be at number six in 2015. However, the risk was ranked number 15 in a surprising change of anticipated direction. As far as political risk/uncertainty was concerned, the majority of participants in our research agreed with us, stating this risk has been severely underrated. This finding remains consistent in both regional and revenue breakouts. Such confirmation could be driven by the fact that many geopolitical conflicts that have brewed over the years are now coming to the fore. Risk connectivity: The theme of risk connectivity featured prominently in Aon’s 2015 Global Risk Management Survey. As an example, risk number five—failure to attract and retain top talent—is influenced by many other risks including social media, corporate social responsibility and inadequate succession planning. Incredibly, the majority of participants (80%) in this follow-up research stated the interconnectivity between risks was not still widely understood. Board and risk management function alignment: Aon’s 2015 Global Risk Management Survey revealed a discrepancy between the risk ratings of risk managers versus C-suite with only three of the top five risks being represented in the rankings of both groups. More than 70 percent of surveyed captive directors agreed with our assessment, saying it was imperative for senior executives and boards of directors to communicate with risk managers and take an active role in assessing and covering the company’s risk exposure.

Reputational risk tops list of concerns, risk managers warned

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