Risk managers identify technology, supply chain and regulatory as the risks currently causing their organizations the greatest concern, according to new research published by ACE European Group.
- Technology, 43%
- Supply Chain, 31%
- Regulatory and Compliance, 27%
- People, 26%
- Geopolitical, 25%
- Reputational, 21%
- Management Liability, 18%
- Environmental Liability, 15%
- Natural Catastrophe, 15%
- Terrorism and Political Violence, 14%
People risk came in at No. 4, and geopolitical risk rounded out the Top 5 emerging risk categories in ACE’s Emerging Risks Barometer 2015, which surveyed 500 companies in Europe, the Middle East and Africa.
Technology risk—which includes cyber attack, data loss and business interruption as a result of systems failure—was chosen by 43 percent of respondents as being among their greatest concerns. Technology risks consume the most time and resources in respondents’ organizations, chosen by 47 percent of risk managers surveyed. Tech also tops the list of risks businesses expect to have the biggest financial impact for their operations in the next two years, chosen by 47 percent of respondents.
Asked which aspects of technology risk currently cause them the most concern, 33 percent of respondents chose hacking/denial-of-service attacks, 30 percent chose systems failure and 29 percent said that advances in digital technology threatened their existing business models.
Supply chain risk topped ACE’s 2013 barometer and remains a major concern in 2015, named by 31 percent of risk managers. Businesses today are better prepared and therefore less concerned about interruption caused by natural disasters, ACE found, noting that they focus instead on issues that can harm corporate reputations. Survey respondents rank unethical labor practices as their biggest supply chain worry, and 61 percent admit they cannot always vouch for the ethical and trading standards of every company on which they rely.
Regulatory and compliance risk ranked third, named by 27 percent of respondents. As companies pursue growth on a global scale, regulation is becoming an increasing source of concern with multinational organizations now facing a patchwork of regulatory regimes across markets and jurisdictions. Importantly, 56 percent of respondents say their company directors may not fully understand the governance and compliance requirements in every country for which they have oversight/responsibility.
People risk came in fourth in this year’s barometer, with 26 percent of respondents saying this risk—which includes risks to people, risks caused by people and talent risks—is among their greatest concerns.
One third (34 percent) of those surveyed say their greatest concern in relation to people risk is time lost to labor disputes, while 75 percent say recent global events, such as political unrest in Ukraine and the Middle East, are causing them to review their travel and security policies.
Geopolitical risks—including regime change, asset confiscation and protectionism, among others—pose a real threat for business, and the risk category was chosen by 25 percent of respondents as being a top concern. Only 30 percent of risk managers surveyed say they are very confident in their ability to manage geopolitical risks, and 26 percent believe these risks will have a significant financial impact over the next two years.