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Pandemics were not a top 10 risk for four out of five businesses before COVID-19, according to a new survey by Aon PLC, which found that a similar percentage have now embraced enterprise risk management to tackle crisis management.
Aon’s survey was conducted in the last quarter of 2020, with more than 500 participants from organizations of various sizes in 41 countries across the globe. It found that 82% of respondents conceded pandemic, or other major health crisis, was not a top 10 risk on their organization’s risk register prior to COVID-19.
This finding is backed by the fact that pandemic risk ranked 60th out of 69 identified threats in Aon’s global risk management survey two years ago.
Following its new global business survey, Aon said enterprise risk management was unable to respond to COVID-19 better because pandemics were so far down many risk registers. And 80% of respondents said the COVID-19 outbreak has fostered a more enterprise-wide approach to incident management.
The survey revealed that less than 30% of respondents in Europe and the EMEA region had a pandemic plan in place before COVID-19. That compares with 31% in North America and 52% in Asia-Pacific (APAC), where businesses already had experience of pandemic planning for SARS.
Some 36% of APAC companies said they are in the reshape phase of COVID-19 response, compared with 29% globally. North America has the highest proportion of businesses in the recovery phase of the pandemic at 59%.
Half of companies surveyed expect COVID-19 to continue to impact their business in a year’s time.
Aon said COVID-19 will mean businesses must reprioritize risk and look at new risk management strategies going forward.
Rory Moloney, CEO of global risk consulting at Aon, said permanent changes in risk management will follow.
“Companies must now ask what risk management and resilience should look like going forward. Among the top priorities for companies seeking to reshape their business are the new and accelerated use of technology, redeploying resources, workforce planning and rethinking the future of work — this is only the beginning of a much more long-term evolution in risk management,” Mr. Maloney said.
Governments around the world have taken emergency measures to support businesses in the pandemic. But more can be done by businesses and the insurance industry to mitigate future risk, said Richard Waterer, managing director of EMEA, global risk consulting at Aon.
“Our survey reveals there is also a clear need for risk transfer solutions to support corporate mitigation efforts. Part of that journey will require companies to rethink access to capital alongside risk, in addition to ongoing collaboration between the public and private sector,” he said.
“Equally important is that the insurance industry innovates in response to companies’ changing needs, increasing global volatility and emerging risks. Successful insurance solutions in the wake of the pandemic will be more agile, strategic, targeted and scalable,” Mr. Waterer added.
Commercial Risk Europe is a sister publication of Business Insurance. More stories from CRE here.
A report by U.K.-based insurance broker Aon P.L.C. said that firms across the world will be compelled to integrate cyber security into their enterprise risk management as cyber attacks grow in volume and scale, Asia Insurance Review reported. The report said that organizations’ boards and executives are likely to adopt standalone cyber insurance policies to cover cyber liability.