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Cyber risk is the top concern of risk managers and executives globally, but climate change is not considered a top 10 risk despite its rising importance, according to the Aon 2021 Global Risk Management Survey released Tuesday.
Cybersecurity was ranked as a top 10 risk by every surveyed sector and for all job roles, including chief financial officers, CEOs and chief people officers, Aon PLC said in the report. It is also projected to be a top risk in 2024.
Climate change rose to 23rd place in the survey, up from 31st place in the 2019 survey, but executives do not consider it will pose a top threat in three years’ time, Aon said.
“From Aon’s perspective, climate change is not only an emerging risk. It is an urgent risk,” the biennial report said.
Climate change presents a “systemic threat” that is going to justify a fundamental change in terms of how companies think and plan for the future, Aon said.
The global COVID-19 pandemic has had 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, Aon said.
“Long-tail risks are not single events. They’re innately interconnected, as we’ve seen with the COVID-19 pandemic fundamentally changing the way the world works, revealing new risks and re-ordering priorities in the C-suite,” Lambros Lambrou, Aon’s CEO of commercial risk solutions, said in a statement.
“A preoccupation with managing these immediate risks may be compromising firms’ ability to invest in the risks of tomorrow,” Mr. Lambrou said.
Pandemic risk entered the top 10 ranking for the first time, jumping to seventh place, up from 60th place in 2019. Reported loss of income from pandemic risk increased to 79 percent in 2021, up from 2 percent in 2019, Aon said.
The pandemic acted as a catalyst and magnifier accelerating changes in the way companies operate, the report said.
Business interruption rose to second place, up from fourth place in 2019, driven by pandemic-induced lockdowns. Executives in Asia Pacific, Europe and those in energy, utilities and natural resources, hospitality, travel and leisure, and life sciences sectors ranked it as their top concern.
Supply chain/distribution failure also surged back into the top 10 in eighth place, exacerbated by the pandemic and several high-profile events, regulatory change and severe weather, Aon said.
Commodity price risk/scarcity of materials — in fourth place — also registered its highest ranking and is a predicted future top risk globally.
For many organizations, the definition of supply chain failure and business interruption have broadened from event-based to impact-based, and from property to nonproperty, the report said.
The COVID-19 pandemic has demonstrated how business interruption can affect multiple industries and companies simultaneously and globally.
Results were based on a survey of more than 2,300 executives at public and private companies in 60 countries across 16 industries.
Essential workers on the front lines during the COVID-19 pandemic are at great risk for developing mental health issues that come from daily exposure to the virus and its implications, according to presenters at a Monday session during the Risk & Insurance Management Society Inc.’s 2021 conference, which was held virtually.