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Aon client study: Risk management must address shifting nature of business volatility in wake of COVID-19 pandemic



  • Cyber risk topped the list as the number one risk globally
  • Long-tail risks have become an important part of the risk landscape
  • COVID-19 has highlighted the interconnectivity of risk

Aon, a leading global professional services firm, today announced the results of its 2021 Global Risk Management Survey, which gathers input from thousands of risk managers across 60 countries and 16 industries every two years to identify key risks and challenges their organisations are facing. The past two years have proved to be incredibly volatile, with the global COVID-19 pandemic having had a ripple effect across other types of risk, such as heightened awareness of reputation and cyber, as long-tail risks have become increasingly important to manage.

The 2021 edition surveyed more than 2,300 respondents in 60 countries across 16 industries at both public and private companies.

With more emphasis and reliance on technology, cyber risk topped the list as the number one current and predicted future risk globally, its highest rank since the inception of the survey. Cyber was also cited in the top 10 list of risks across each region, industry and respondent type.

The top 10 risks also strongly reflect the current landscape, namely COVID-19 and its impact on organisations. Amidst a backdrop of challenging market conditions, this is testing the ability of firms to manage volatility and make better decisions. Organisations are shifting their focus from event-based to impact-based risk assessments: for example, business interruption was once seen as a linear risk, but the COVID-19 pandemic has demonstrated how it can affect multiple industries and companies simultaneously and globally.

“The world is a more volatile place and the importance of better decision making has never been greater,” said Lambros Lambrou, Aon’s CEO of Commercial Risk Solutions. “Long-tail risks are not single events. They’re innately interconnected, as we’ve seen with the COVID-19 pandemic, fundamentally changing the way the world works, revealing new risks and re-ordering priorities in the C-suite. A preoccupation with managing these immediate risks may be compromising the ability of firms to invest in the risks of tomorrow.”

Exacerbated by the COVID-19 pandemic, and highlighting the interconnectivity of risk, the top 10 global risks according to the 2021 Global Risk Management Survey are:

  1. Cyber Attacks/Data Breaches 
  2. Business Interruption
  3. Economic Slowdown/Slow Recovery
  4. Commodity Price Risk/Scarcity of Materials
  5. Damage to Reputation/Brand
  6. Regulatory/Legislative Changes
  7. Pandemic Risk/Health Crises
  8. Supply Chain or Distribution Failure
  9. Increasing Competition
  10. Failure to Innovate/Meet Customer Needs

“Historically, risk managers and insurers have learned and made decisions by analysing data from loss events as they have occurred. This approach must evolve in order to proactively manage emerging exposures such as complex supply chains; we can’t rely solely on the past to inform future risks,” said Rory Moloney, Chief Operating Officer for Enterprise Clients at Aon. “Several of the top risks identified in this year’s survey highlight four key areas of client need we’ve identified, particularly unmet needs in the form of long-tail risks that are no longer on the horizon. Those risks are on our doorstep. There is an increasing realisation of the need to address these ‘known unknowns.’ As we face unprecedented events, the challenge will be how to best develop solutions to properly prepare for and manage through them.”

The report highlights the top 10 risks by industry and region, as well as risk readiness, associated losses and mitigation actions for each of the top 10 risks. In addition, the report includes the predicted top 10 risks in the next three years and Aon’s analysis of underrated risks. Highlights of key findings by region and industry include:

  • Pandemic Risk/Health Crises risk jumped to number seven, up from number 60 in the 2019 survey, and was listed in the top 10 for every region except North America.
  • Business Interruption ranked as the second-highest threat globally — and respondents in some geographies (Asia Pacific and Europe) ranked it as the number one risk.
  • Commodity Price Risk/Scarcity of Materials is a predicted future top risk globally.
  • Four risks consistently ranked in the top 10 risks in each region: Cyber Attacks/Data Breaches, Business Interruption, Economic Slowdown/Slow Recovery and Regulatory/Legislative Changes.
  • Supply chain or distribution failure re-entered the top 10 and ranked highest in Europe and North America, in large part to its linkage to the pandemic and geopolitical impact.
  • Though not a top global risk, workforce scarcity and retention issues ranked highly in Asia Pacific and North America.
  • Energy, Utilities & Natural Resources; Hospitality, Travel & Leisure and Life Sciences ranked Business Interruption as the number one risk.
  • Commodity Price Risk/Scarcity of Materials was ranked as the number one risk by respondents in the Food, Agribusiness & Beverage and Industrials & Manufacturing industries. It’s predicted to rise to the top five both globally and in Europe by 2024.

The 2021 Global Risk Management Survey also includes a deep dive on key issues, including risk management and assessment techniques, controls and mitigation and key risks underwritten by captives. Additional findings from the survey include:

  • The 2019 survey revealed that global businesses had the lowest risk preparedness scores in 12 years, averaging 53 percent globally. According to the 2021 survey, despite increases in reported levels of risk readiness for traditional risks, growing volatility and the changing nature of top 10 risks led to the highest ever reported loss of income for businesses.
  • Though businesses didn’t list climate change as a top risk (number 29), it’s inherently tied to other, more tangible risks, where the immediate impact is measurable – such as business interruption, material scarcity, damage to reputation, regulatory changes and supply chain issues, which are all top 10 risks. Another underrated risk, Environmental, Social and Governance (ESG), ranked at number 31, up from number 39 in 2019. ESG is predicted to enter the top 15 risks globally in the next three years.
  • Only 29 percent of survey respondents plan on increasing their investment level in risk management resources.

 Conducted every two years since 2007, Aon’s Global Risk Management Survey provides data and insights to enable better decision-making around risk in an increasingly volatile and complex business environment. The full report is available here.