Global Businesses Must Navigate Rising Risks in the Coming Year
As global businesses gear up for the challenges of the coming year, they are faced with a myriad of risks that could potentially disrupt their operations and threaten their success. Two recently released reports shed light on the top concerns for businesses worldwide, including artificial intelligence (AI), cyber threats, supply chain disruptions, and talent shortages.
The Hartford Risk Monitor, which surveyed agents and brokers, highlighted the most pressing risks for mid to large businesses. Key concerns centered around AI, cyber threats, weather-related risks, insurance coverage gaps, and geopolitics. The report also emphasized the importance of monitoring risks related to supply chain disruptions, operational costs impacted by geopolitical changes, cyber-attacks becoming more frequent and severe, emerging risks associated with AI, keeping up with technological advancements, insurance coverage gaps exposed by extreme weather events, and growing awareness of multinational exposure.
Aon’s 2023 Global Risk Management Survey, conducted among 3,000 respondents across 61 countries, echoed similar concerns. However, AI and climate change concerns did not rank as high. The survey revealed that less than 40 percent of organizations have conducted supplier resiliency assessments, and less than 20 percent have diversified their supplier base to mitigate supply chain or distribution failure risks.
One surprising finding from Aon’s survey was that attracting and retaining talent emerged as a top concern for businesses. Economic slowdowns, regulatory conditions, cyber risks, and business interruption were also identified as significant risk concerns.
The interconnected nature of risks and people challenges in today’s business landscape was emphasized by Aon CEO Greg Case. The human capital issue intensifies all risks, with cyber-attacks and supply chain issues being exacerbated by a lack of training and a shortage of skilled employees to address these risks.
According to Aon, human capital concerns are fueled by rising healthcare costs, intense competition for talent, workforce shortages, and a lack of retirement preparedness. Concerningly, only 11 percent of survey respondents have quantified their people risks, indicating a significant gap in understanding and addressing this crucial aspect of business.
Both reports highlighted the importance of evaluating risks associated with volatile weather conditions, including storms and natural disasters, which can impact business operations both locally and globally. Staying informed about geopolitical crises and conflicts is also critical for multinational corporations and businesses reliant on global supply networks.
Tracey Ant, head of Middle & Large Commercial Business Units at The Hartford, stressed that many businesses with multinational exposure lack adequate insurance coverage due to a lack of communication with their agents or brokers. Concerns surrounding coverage gaps are compounded by changes in economic inflation.
Both companies urged businesses to prioritize cybersecurity and practice good cyber hygiene. The ever-evolving threats in the digital realm continue to be significant and complex.
As businesses face the challenges of the coming year, it is vital for them to address these rising risks head-on. By recognizing the interconnected nature of risks and prioritizing human capital, businesses can enhance their resilience and minimize potential disruptions. Additionally, staying vigilant about weather-related risks, geopolitical shifts, and cybersecurity threats will help businesses navigate the complex global landscape successfully.
Sources:
– The Hartford Risk Monitor
– Aon’s 2023 Global Risk Management Survey
