Lack of innovation, talent recruitment also on list
Business leaders worldwide identified economic risk as the greatest threat they face today, but also emphasized the need to innovate, mitigate technology failure and manage talent to compete in the future, according to Aon's 2011 Global Risk Management Survey.
As the global economy continues to recover, the threat of sustained economic trouble weighs heavily on the nearly 1,000 business professionals from 58 countries who participated in the survey. This group identified the economic slowdown as the number one risk facing organizations across all geographies, with 67 per cent of respondents reporting loss of income in the last 12 months associated with this risk, found the survey.
"The findings shared in our report underscore the undeniable interdependence among various risks as well as economies around the globe,” said George Zsolnay, head of Aon Analytics in the United States. “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."
Failure to innovate or meet customer needs made the top 10 list of global risks for the first time this year, ranking sixth on the list. This reflects growing concern about the risk of losing market share to more forward-looking competitors, said Aon.
Technology failure also earned its first top 10 spot, ranking ninth on the list.
"Throughout the economic recession, many organizations pulled in their oars — tabling research and development projects, decreasing spend on information technology and freezing hiring," said Constantin Beier, global head of Aon Analytics and chief commercial officer of Aon's Center for Innovation and Analytics in Dublin. "Today, business leaders are realizing this strategy won't work in the long term. Organizations must begin reinvesting in fundamental areas such as these if they are to survive and thrive."
Failure to attract or retain talent ranked at the bottom of the top 10 risks list in 2009 — a time when companies were experiencing hiring freezes and layoffs. In 2011, this risk is viewed as more acute, taking the number seven spot on the list. The majority of respondents (60 per cent) said they do not have a plan in place to handle this risk, found the survey.
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
