UK risk managers rank climate change higher than other regions

The UK was the only country to feature climate change in the top ten risks facing businesses today, according to Aon, which criticised the low ranking of climate change as a current and future risk in a global poll of risk managers. UK risk managers ranked climate change as the tenth-biggest risk facing their business today, rising to fourth place in a poll of future risks likely to face businesses in 2026. The UK is unique for placing climate change higher up the agenda as a major future risk than other regions, Aon said. Climate change did not make the global top ten list of future risks in Aon’s Global Risk Management Survey, published last month, although it featured in position seven for risk managers in Latin America and nine for European respondents in the 2023 survey. Aon said climate change was an “underrated risk” in its global survey, alongside AI and intellectual property risks, which present “a significant threat to organisations, and we believe they should have been ranked higher by participants”, Aon warned. The broker said concerns about climate change for UK risks managers are driven by the potential for regulatory changes to affect climate-related efforts, alongside falling behind on climate strategies and compliance. “Some respondents may anticipate that climate efforts will need to accelerate rapidly as 2050 (the targeted deadline for global net zero) grows nearer, exacerbating existing pain points stemming from talent shortages, cost and increasing risk,” Aon explained. “Faced with increasing regulatory requirements and more extreme weather, climate change is clearly on the agenda for many business leaders and has established its place as a key risk for UK organisations.” Following publication of its Global Risk Management Survey of nearly 3,000 executives and risk professionals from more than 60 countries, further analysis of the UK results reveal cyberattack is the leading current risk for UK companies, followed by failure to attract or retain top talent and economic slowdown. Damage to brand or reputation ranked in fourth position, followed by failure to innovate or meet customer needs, business interruption, and regulatory or legislative change. Cashflow or liquidity risk is new to the top ten list for UK businesses 2023, Aon said, in eighth place, driven by sharp increases in the cost of living, inflation and interest rates. Supply chain was ranked as the ninth-biggest risk facing UK companies today, with climate change in tenth place. Aon said UK risk managers named AI as the biggest threat to their business in the future, higher than any other region surveyed. Aon said this result is driven by the UK’s stance on regulating AI and concerns about the difficulty to quantify the AI risk. “UK respondents are aware that AI will have major implications for businesses, but its practical applications and potential competitive advantages are largely ill-defined, and expert commentary on its potential dangers is both ominous and louder than any discussion about the benefits of AI,” Aon said. Graeme MacMillan, chief broking officer, commercial risk UK, at Aon, said many of the top ten risks identified in its Global Risk Management Survey are interconnected. “The world is more volatile and the macroeconomic environment in which risks must be managed is in constant flux. As organisations’ exposure to individual risks intensifies and evolves, so too do the connections between them, as seen in our latest risk management survey. “For many of the risks identified, organisations can build risk resilience and effective mitigation by identifying the skills they have and the skills they need. Building resilience pays off during times of economic volatility and high operating costs, as firms with a sustainable workforce, stronger liquidity and a good reputation are likely to be better positioned to respond to challenges compared to less-prepared companies.”

UK risk managers rank climate change higher than other regions

The threat of climate change is underrated, says Aon

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