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The economic slowdown tops risk managers' concerns worldwide, according to a survey by Aon Corp.
Economic slowdown has risen from seventh place in risk managers' ranking of risks since Aon last conducted its global risk management survey in 2007.
Regulatory and legislative changes were ranked second in risk managers' list of concerns, the survey showed, while business interruption, the top-ranked risk in Aon's similar survey two years ago, was the third biggest concern.Risk managers' other largest concerns were: increasing competition, commodity price risk, damage to reputation, cash flow/liquidity risk, distribution or supply-chain failure, third-party liability and failure to attract or retain top talent, the study showed.
Increasing competition, commodity price risk and cash flow/liquidity risks were new entrants into the top 10 list since Aon's 2007 survey.
Geographically, economic slowdown was ranked the top concern of risk managers in Asia Pacific, Europe, Latin America and North America, and was the second-biggest concern in the Middle East and Africa after business interruption, according to the survey.
Aon's global risk management survey comprised 551 companies from 40 countries during the last quarter of 2008.
Of respondents, 60% said they believed they were prepared to face the risks arising from the economic slowdown, and overall risk preparedness for the top 10 risks has increased to 70% from 60% since the last survey, Aon said.
More than half of respondents, 57%, said they had experienced a loss of income associated with the economic slowdown over the past 12 months.
Almost a quarter, 24%, said they had experienced loss of income because of regulatory/legislative changes, while 30% said they had suffered a loss of income caused by business interruption.
"You're seeing the fundamental effects" of the global economic downturn, said Stephen P. McGill, chairman and chief executive officer of Aon Risk Services, the retail brokerage division of Chicago-based Aon Corp., in an interview.
He said that the 2009 global risk survey did yield some surprises. For example, reputational risk dropped from being the top concern in 2007 to the sixth most pressing concern in 2009. That drop emphasizes the increased importance of the economic slowdown on companies, Mr. McGill noted.
One significant trend highlighted by the survey is the growing importance of risk as a board-level issue.
He said that about nine in 10 respondents to the survey now said their boards were involved in looking at risk. "That isn't going to change anytime soon," he said.