31 May 2017
RISK 27
Damage to reputation top concern for businesses
Trends in economics , demographics and geopolitics along with rapid technology advancements are transforming traditional risks for global businesses , adding new urgency and complexity to old challenges . This is according to Aon ’ s 2017 Global Risk Management Survey . Damage to reputation / brand remains the top ranked risk by businesses . While defective products , fraudulent business practices and corruption continue to be key threats to reputation , social media has greatly amplified their impact , making companies more vulnerable . Additionally , risks that are traditionally uninsurable are becoming more volatile and difficult to prepare for and mitigate .
Dramatically rising in the ranks from number nine to number five this year , cybercrime has now joined a long roster of traditional causes that can trigger costly business interruptions . It is now the top concern among businesses in North America , as the frequency of cyber breaches are increasing and incident response plans have become more complex due to regulation and mandatory disclosure obligations .
This trend of disclosure obligations is also being observed internationally , for example with the EU General Data Protection Regulations going into effect in 2018 . As a result , cyber concerns will continue to be significant for businesses .
Political risk / uncertainties , previously ranked at number 15 , has now re-entered the top 10 risk list at number nine . At the same time , risk readiness declined from 39 % in 2015 to the current 27 %. Interestingly , developed nations that were traditionally associated with political stability are becoming new sources of volatility and uncertainty .
This is a concern for businesses , especially those operating in emerging markets . Additionally , according to Aon ’ s latest 2017 Risk Maps , which cover political risk , terrorism and political violence , trade protectionism , is on the rise while terrorism and political violence ratings are the highest they have been since 2013 .
“ We are living in a challenging new reality for companies of all sizes around the world . There are many emerging influences that are creating opportunity , but at the same time , creating risks that need to be managed ,” says Rory Maloney , Chief Executive Officer for Aon Global Risk Consulting . “ As the risk landscape for commerce evolves , businesses can no longer rely solely on traditional risk mitigation or risk transfer tactics . They must take a crossfunctional approach to risk management and explore different ways to cope with these new complexities .”
Disruptive technologies / innovation is an emerging risk that participants ranked at number 20 this year but anticipate it to be in the top 10 list of risks by 2020 . With the recent introduction and adoption of new technologies , such as drones , driverless cars and advanced robotics , businesses have an increased awareness of the impact of innovation . Respondents from several industries – not just the technology sector – realize the significance of potential disruptors from within their own industry as well as outside their industry .
Noteworthy Findings :
• Moderate global economic growth offered organisations reason for cautious optimism , which resulted in economic slowdown / slow recovery dropping to the number two slot in the top 10 risks list
• Increasing competition moved up to number three this year . In many cases , competition has become so fierce that it is increasingly challenging for executives to clearly identify in what industry and with which companies they are competing
• Property damage , which was ranked number 10 in 2015 , has slipped to number 13 . This could reflect changing priorities , as political risk / uncertainties has taken on a new urgency
• Distribution or supply chain failure has dropped to its lowest ranking since 2009 , falling from number 14 to number 19
• Business interruption is not considered a top 10 risk by companies in the Middle East / Africa , which have historically seen higher exposure to incidents that interrupt business operations
• Failure to attract or retain talent could become more pronounced if immigration policies shift in North America and Europe where the tech industries have long been staffed with talented immigrants they attract from around the world .
Conducted in the fourth quarter of 2016 , Aon ’ s 2017 Global Risk Management Survey gathered input from 1 843 respondents at public and private companies around the world .
Demystifying five common life insurance myths
Despite increasing awareness about the importance of having life insurance , some consumers remain confused and undecided due to myths that uninformed people spread through the grapevine .
“ Death is usually the last subject people look forward to discussing over the dinner table . Similarly , life insurance conversations are viewed in the same light and further perpetuated by misconceptions that this form of cover is complex and not easy to take up ,” Lee Bromfield , CEO of FNB Life says .
Bromfield demystifies common myths that consumers have about life insurance :
• Only married people need life insurance – one of the biggest misconceptions about life insurance is that if you are single , don ’ t have children or still young , you do not need cover . Life insurance caters for anyone that is financially dependent on you in the unfortunate event that you pass away .
• Prevailing health issues will prevent you from getting cover – you may pay a slightly higher premium than the average person if you have pre-existing health issues , due to your risk profile . However , if the health condition is well managed , you should have no challenges getting life insurance . For example , there are many people living with chronic diseases such as diabetes , hypertension and asthma that have life cover . Moreover , people that engage in dangerous hobbies and have habits like smoking are also eligible for life cover .
• You ’ ll be subjected to various laboratory tests before getting cover – when taking up life insurance you need to complete a medical examination to determine your risk level . A practitioner will either ask you a few medical questions over the phone or a professional nurse may take blood tests in the comfort of your home or workplace . The process is often quick and efficient .
• Wealthy people don ’ t need life insurance – while every situation is unique , life insurance plays a significant role when wealthy individuals pass on wealth to the next generation . It can give heirs and beneficiaries peace of mind knowing that costs related to winding up a deceased estate are catered for . For business owners , costs related to selling and liquidating the business or transferring ownership can be covered through life insurance .
• I have adequate cover through my employer – cover provided by employers often comes with its own terms of conditions and ends when you leave your job . Solely relying on this cover can leave you uninsured and result in you paying hefty premiums if you take cover when you are much older .
“ There are quite a number of misconceptions that exist about life insurance in general . If you are looking to take up life cover , it is advisable to speak to a professional to avoid getting misleading and inaccurate information ,” says Bromfield .