Cyber risk enters broker’s top 10 global risks for first time
Reputational damage is the top risk facing businesses, owing much to the advent of social media and 24-hour news, according to Aon.
The broker’s Global Risk Management Survey 2015 collected the views of almost 1,500 risk professionals from 28 industry sectors, at firms of all sizes in 60 countries across the world, and found that reputational damage was considered the most formidable risk globally.
Cyber risk made it into the top 10 for the first time as the ninth biggest risk to corproates. The remaining eight most formidable risks include: economic slowdown/slow recovery (2), regulatory/legislative changes (3), increasing competition (4), failure to attract or retain top talent (5), failure to innovate/meet customer demands (6), business interruption(7), third-party liability (8) and property damage (10).
Respondents included chief financial officers, chief executives, chief risk officers, risk and insurance managers and HR managers among others. Breaking down the responses by position within the company, the survey results suggest that C-suite personnel are more concerned with financial and economic risks, including commodity price risk, economic slowdown and technology failure. Risk managers focused on liability-related risks, such as cyber, property damage and third party liability.
The report says: “Major headlines about massive data breaches, large-scale product recalls, mysterious plane crashes and aggressive government investigations have raised concerns about corporate reputation and brand damage.
“The unpredictable nature of such crises in an age of 24-hour news cycles and instant social media poses a serious threat to company’s hard-earned global image.
“While negative news can undermine a company’s reputation in a matter of minutes or hours after a crises, intensive media scrutiny also heightens awareness of crisis preparedness.”
Aon chief innovation officer Stephen Cross said: “It is little surprise to see cyber risk enter the top 10 at the same time we can see increasing concern about corporate reputation as the two issues are a great example of the interconnectivity of risk.
“What is surprising was the lack of alignment between the board and the risk manager. Such diverse views illustrate how imperative it is that the board of directors have effective and regular communication with risk managers to effectively assess and mitigate the company’s risk exposure.”