Ten years after the last recession, economic slowdown has re-emerged as the top risk facing organizations globally, according to the results of Aon’s “2019 Global Risk Management Survey,” created by the professional services company .
The resurgence of this concern is connected to accelerated rates of change in market factors, globalization and geopolitical uncertainty, the study shows.
Aon will present the full report in Puerto Rico, in addition to an analysis of the data and its impact, on Oct. 10 at AFDA Fraternity in Condado.
“The accelerated pace of changes that are taking place in the segments that directly affect the behavior of the markets has caused risk readiness preparedness within companies to reach its lowest level in 12 years among survey participants,” said Marcelo Munerato, chief commercial officer of Aon Latin America.
“This lack of readiness is affected by volatile global economic conditions and rapid changes in today’s digital and sharing economy,” he said. “Therefore, risk management plans must take a different approach than they had in the past.”
To conduct the study, Aon surveys thousands of risk managers across 60 countries and 33 sectors every two years to identify the key risks and challenges that organizations face.
In this year’s report, respondents rated the economic slowdown as their No. 1 risk. Damage to reputation/brand was cited as concern No. 2, reflecting the potential for significant consequences when corporate setbacks occur in the middle of a 24/7 news cycle on social networks. In Latin America the damage to reputation/brand occupies the 4th place.
Accelerated exchange rates in market factors that result from an increase in protectionist international trade policies, and include increased regulatory activity and geopolitical tension, jumped from 38 in the previous survey to complete the three main concerns on the 2019 list.
Aon got the answers to its global 2019 risk management survey in the fall of 2018, during a time of enormous uncertainty around the world, fueled by stock market crashes, trade policy disputes, aggressive regulatory actions, product recalls, an active cycle of devastating natural disasters, large-scale cyberattacks, and economic scandals and corruption.
Natural disasters played a leading role in 2017, which was the second costliest year on record for insured and uninsured losses and will most likely become the record year for insured losses with further loss development from Hurricanes Harvey, Irma and María, according to the study.
Combined, 2017 and 2018 represent the most insured losses for back-to-back years on record, with $140 billion and $90 billion, respectively.
These broader macroeconomic risks, combined with the speed of technological change, are contributing to a growing prominence of new threats that can disrupt supply chains and business operations in general, the report showed.
As a result, a third of the Top 15 of the risks are new participants in the list, including the accelerated pace of change in various market factors and disruptive technologies.
“Changes in the results of this year’s survey indicate that the risk management function must evolve to reach the business level,” Munerato added. “This, combined with the use of predictive data and analysis that can generate actionable information, will help companies protect their final results while adapting to accelerated changes and economic fluctuations.”