- 50 percent of Indian businesses cited Economic Slowdown/Slow Recovery as one of the top risks that incurred losses
- 83.3 percent of Indian businesses expect total cost of insurance risks to increase
- Companies least prepared for reputation risks despite being assessed as one of the top 5 future risks
Aon plc (NYSE: AON), a leading global professional services firm, has announced the results of its 2021 Global Risk Management Survey for India. The study gathers input from thousands of risk managers globally 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 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/territories 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. In India, Economic Slowdown and Accelerated Change in Rate of Market Factors topped the list of risks in 2021, while Business Interruption and Liquidity risks were cited as two of the projected top five risks for 2024.
“Indian businesses are maturing to the need for periodic insurance assessment and proactively planning to mitigate insurable risks,” said Jonathan Pipe, chief executive officer, India at Aon. “We have seen a significant increase in the use of captives to transfer risks as well as greater support of external experts in assessing all possible business risks. Companies are committing additional budgets to manage and mitigate their potential risks, particularly accelerated rates of change in market factors, economic slowdown, and business interruption. With better planning and expert advice, most of the risks can be managed efficiently.”
The top 10 risks in India strongly reflect the current landscape, namely the COVID-19 pandemic and its impact on organisations amidst a backdrop of challenging market conditions: global slowdown, supply chain disruptions, delayed infrastructure projects, and inflation. This is testing firms’ ability to manage volatility and make better decisions. Organisations are shifting their focus from event-based to impact-based risk assessments: for example, the business interruption was once seen as a linear risk, but COVID-19 and geopolitical risks have demonstrated how it can affect multiple industries and companies simultaneously and globally.
India Inc is most prepared for Accelerated Rates of Change in Market Factors risks with 50 percent of businesses surveyed having a risk management plan, followed by Increasing Competition with 28.6 percent. Businesses, however, were least prepared for Reputation Risks with none of those surveyed having risk management or continuity plan for it despite it being amongst the top five risks.
The Top 10 Risks for India in 2022:
1. Economic Slowdown/Slow Recovery
2. Accelerated Rates of Change in Market Factors
3. Pandemic Risk/Health Crises
4. Business Interruption
5. Damage to Reputation/Brand
6. Cash Flow/Liquidity Risk
7. Cyber Attacks/Data Breach
8. Increasing Competition
9. Failure to Attract or Retain Top Talent
10. Commodity Price Risk/Scarcity of Materials
The Top Five Future Risks for India
1. Business Interruption
2. Cash Flow/Liquidity Risk
3. Economic Slowdown/Slow Recovery
4. Capital Availability
5. Artificial Intelligence (AI)
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. 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.