Posted on: May 19, 2011 Posted by: Diane Swarts Comments: 0

The AON 2010 -2011 business risk study prioritises economic risk as the greatest business threat, linked to political risks.

The insurance broker surveys a thousand business professionals in 58 countries every year. The economic slump haunts employers across the world, and 67% of respondents report income loss due to economic depression in the last 12 months.

Business leaders across the globe identified economic risk as the greatest threat, and said they were responding by innovation, mitigating technology failure, and managing talent.

AON said the 2011 findings confirm “interdependence among various risks and economies around the world.”

The insurer recommends “an enterprise wide approach to managing risk, and optimising strategy on a global basis.”

Money and political risks linked

Rory Moloney, head of AON Risk Consulting business in Europe, Middle East and Africa, said the top risks include financial stability in several nations, linked to political risks, and exchange rate fluctuations.

The AON survey preceded religious driven political upheaval in the Middle East and North Africa, as well as New Zealand and Japanese earthquakes, which add to and interact with economic risks.

Skills drain is a growing risk

Many employers had shelved research, development and projects, decreased spending on information technology, and frozen recruitment and training. “Business leaders now realise that this strategy would not work in the long term”, commented AON.

Employers should “reinvest in fundamentals like skills and research. Failure to attract or retain top talent was risk number 10 in 2009, after major layoffs. In 2010 -2011, talent and skill had risen to be the seventh largest risk.

Quality risk recognised

Failure to innovate or meet customer needs is perceived as the sixth largest risk, the first time that quality management issues are among the top ten perceived business risks.

“Customer needs reflect a growing concern about the risk of losing market share to forward looking competitors”, said AON.

Technology failure and system failure ranks ninth on the risk list, linked to business interruption, continuity, and brand damage, which are also top ten risks.

Many central African countries are rated high on the list of political risks and sovereign non-payment risks.

IMAGE: Political risk map, from a separate AON report. A map rating risk of sovereign non-payment for services, resembles the political risk map, confirming that central African governments and states are risky business partners.

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