2021 Global Risk Management Survey: Cyber attacks, reputational risk and innovation gaps in Australia
Aon’s 2021 Global Risk Management Survey has revealed that long-tail risks have become a focal point of the risk landscape. We have seen cyber risk increasing as reliance on technology has increased, and global economics and trade have been impacted by unprecedented lockdowns all over the world.
The business climate in 2021 has experienced a perfect storm: Business models are being reshaped, while organisations across the globe are responding to and recovering from the once-in-a-lifetime set of challenges posed by the COVID-19 pandemic.
The latest survey has also highlighted the growing interconnectivity of risks, with cyber-attacks, damage to brand, and failure to innovate and meet customer demand identified as the top three risks facing Australian businesses in 2021.
Key findings – top 10 risks identified in Australia
The top risk in Australia: Cyber attacks and data breaches
COVID-19 ushered in a substantial shift in the pace of business, and in turn exponentially intensified cyber risk.
It is notable that the sharp move of cyber from the fifth position to first in the course of two years speaks to the pervasiveness of the risk.
In fact, cyber security is perceived as a top 10 risk by every surveyed sector and for all job roles, including CFOs, CEOs and chief people officers.
In the future, it is predicted we will continue to see ransomware, supply chain risk, business email compromise and attacks against operational technology as the primary cyber threats to Australian businesses.
Australian organisations have become acutely aware of the severity of these attacks, and failure to appropriately assess, quantify and transfer cyber risk is also the root cause of many of the other risks ranked in the top five – notably, brand and reputation, business interruption, legislative changes to name a few.
Damage to reputation and brand still a key issue
Damage to reputation and brand has ranked consistently in the top five globally and it has remained in the top three in Australia for several years.
Australian businesses recognise that reputational crises can have a substantial impact on a company’s future. In 2021 and beyond, the continuing impact of COVID-19 and then on businesses’ responses to the changing economy, the prevalence of social media threats and the 24/7 news cycle has the potential to create immediate and lasting impacts on an organisation’s shareholder value and reputation.
The drive to innovate and meet customer demands
While COVID-19 has caused devastating disruptions to the global economy, it is also forcing companies across different industries to innovate and reinvent themselves.
The challenge is this: How can these innovations bring systematic growth after the pandemic abates?
The COVID-19 crisis has taught us that it is important for organisations and leaders to become more comfortable with uncertainty and ambiguity. Failure to innovate is a commercial risk that can also be directly impacted by impaired resilience and a failure to manage volatility.
Ranked at number four in Australia and number one in APAC, business interruption is an ever-present threat across all organisations and industries.
Globally, it is not surprising that participants in the hospitality, travel and leisure industry rated business interruption as a number one risk. This sector faced the biggest interruption issues because of continued travel restrictions and a precipitous drop in consumer demand.
While business interruption is a traditional risk by name, its profile is evolving fast. Businesses need to improve their understanding of this new form of volatility and build market solutions to manage this risk.
The war for talent remains a top concern
Failure to attract or retain top talent remains top of mind for Australian businesses, creeping up into the top five concerns but not featuring in the top 10 list globally. This is particularly interesting in light of reports across the world on the ‘great resignation’ of employees following COVID-19.
While in Australia we have not yet seen this, what we are seeing is employees demanding more from their employers, rejecting the traditional employer-led model and re-examining what is important to them in their roles and work/life balance.
Organisations therefore need to examine their employee value proposition closely and consider what they are offering their employees in terms of benefits and flexibility.
Future risks and outlook in Australia
In contrast to cyber attacks and data breaches, the risk of damage to reputation/brand has remained at a relatively stable level from the last survey in 2019 and is the only risk in the top 10 that has not seen increased readiness globally.
Australian survey participants anticipate that the risks over the next few years will continue to be cyber attacks, reputational risk, the need to innovate, as well as increasing fears of an economic slowdown, increasing competition and ever-present risk of regulatory change.
About the survey
Aon’s 2021 Global Risk Management Survey, a biennial web-based research report, gathered the responses of 2344 risk decision makers from 16 industry groups, which included small, medium and large companies in 60 countries around the world.
In Australia, we captured 121 responses across various industries with the top represented industries being public sector; energy, utilities and natural resources; financial institutions; construction and real estate; and retail and consumer goods.
View the Global Report.