People risks intensify all other top business issues
Aon has published its 2023 Global Risk Management Survey, revealing the most pressing business challenges this year. The most notable finding is that failure to attract and retain talent made it to the top 10 after not making it in 2021, which indicates a shift in how risk managers view human capital at present.
The brokerage giant also said this change in perspective is further observed in other items that made it to the top 10, noting all of them have been intensified by human capital issues. For instance, the shortage in talent and skills could impact innovation and increase the chances of cyberattacks, regulatory breaches, and supply chain issues, among others.
Top 10 global risks according to the 2023 Global Risk Management Survey are:
- Cyberattacks/Data breach
- Business interruption
- Economic slowdown/Slow recovery
- Failure to attract or retain top talent
- Regulatory/Legislative changes
- Supply chain or distribution failure
- Commodity price risk/Scarcity of materials
- Damage to reputation/brand
- Failure to innovate/meet customer needs
- Increasing competition
Aon said another interesting finding is the items that didn’t make it to the top 10, including AI being ranked #49 this year and climate ranking #17. Climate also ranked lower than expected despite more than $313 billion in global economic losses from catastrophic events last year.
“The world is more volatile, reflecting a series of profound transitions across trade, technology, weather and workforce issues that have awoken business leaders to the increasingly interconnected nature of risk and people challenges,” said Greg Case, CEO of Aon.
Changes in the top 10 list
In its 17th year, Aon’s biennial survey found that human capital issues are not just a “people problem,” but also a key business risk fuelled by the rising costs in healthcare, shortage in workforce, and a lack of preparedness for retirement. This year, “attracting and retaining talent” ranked fourth globally when this didn’t break the top 10 in 2021. Only 11% of respondents said they have quantified their people risks, revealing a significant gap between risk awareness and risk preparedness.
“We are at a pivotal moment in time, when business leaders are recognizing the true cost of human capital challenges and the reality that people risk intensifies all other top business risks,” said Lambros Lambrou, CEO of Human Capital at Aon.
Despite news about global losses in natural calamities and emerging technology, climate and artificial intelligence came up short, just ranking #17 and #49, respectively. Aon said in a news release that the results suggest a lack of awareness about the potential impact of these issues on the corporate risk profile.
“What is more confounding are the risks that are noticeably unaccounted for in leaders’ assessments of the challenges they must address, notably climate risk,” said Andy Marcell, CEO of Risk Capital and CEO of Reinsurance Solutions at Aon. “Climate is not an emerging risk, but an urgent one, with increasingly monumental implications for businesses of all sizes. What leaders need now are insights from advanced analytics and modelling alongside innovative parametric solutions that will help them make better decisions today and protect them in the future.”
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