For the first time since 2007, damage to brand and reputation has emerged as the biggest risk in information technology giant Aon's 2015 Global Risk Management Survey, while cyber risk has entered the top ten for the first time, this year.

The connection between these two risks was felt around the world in 2014, as a rash of data breaches demonstrated the “fragile nature” of consumer trust in leading corporations.

Cyber risk entered at number nine, which reinforced its emergence as a key risk factor, while damage to brand and reputation was cited as the top overall concern facing global organisations, further underscoring the increasing importance of cyber risk, as it has been regularly linked to brand and reputation issues.

The survey revealed that Aon's global clients “strongly” felt that damage to brand and reputation ranked as a top concern across almost all regions and industries. This could be attributed to the growing challenges businesses were facing among the risks found in the top ten list, including business interruption, property damage and failure to innovate. 

The 1400 survey respondents to the Aon Global Risk Management Survey
included CEOs, CFOs and risk managers providing comparative insight into different perceptions of risk.

Typically, financial and economic risks, including commodity price risk, economic slowdown and technology failure, were seen as damaging at C-suite level, with risk managers focused on liability-related risks such as cyber, property damage and third-party liability.

"The insights provided by this survey help us understand how risks are changing as the global environment evolves. It's little surprise to see cyber risk enter the top ten at the same time we are seeing increasing concern about corporate reputation, as the two issues are a great example of the interconnectivity of risk,” Aon South Africa business unit head: financial services group Alicia Goosen said.

“What is surprising, was the lack of alignment between the board and the risk manager,” she added.

Such diverse views illustrated how imperative it was that the board of directors had effective and regular communication with risk managers to effectively assess and mitigate the company's risk exposure.

KEY MOVERS
Failure to innovate or meet customer needs remained at the sixth spot on Aon's 2015 Global Risk Management Survey and is projected to rank fourth in 2018. Respondents in the technology industry indicated that this was the most significant risk to their business.

The severity of this risk tied to increasing competition, which was expected to top the list in three years, raised a red flag for the insurance industry.

Property damage also reentered the top ten global risk list for the first time since 2007, up from 17 in 2013. Hotels and hospitality, nonaviation transportation and real estate ranked this risk highest.

Unprecedented weather events in recent years have also bundled this risk with the cause and effect of business interruption, which took the seventh spot, with reported losses down more than 10% from the 2013 survey.

"[The] survey…reveals a number of different challenges driven by today's globally interdependent environment.

“While new risks such as cyber have moved to centre stage, established risks such as damage to reputation or brand, are taking on new dimensions and complexities. The interconnected nature of these risks reinforces the importance of strategic risk management in every organisation," Goosen noted.