The changing risk landscape

How do you better prepare your organisation for the broad range of emerging risks which threaten your ability to continue growth, protect your brand and service your clients and stakeholders?

At the time of Aon’s Global Risk Management Survey in 2019, 82% of respondents said that a pandemic or major health crisis was not a top 10 risk on their organisation’s risk register. In comparison, pandemic or major health crisis ranked 7th in Aon's 2021 Global Risk Management Survey.

The pandemic has placed greater emphasis on forward planning and the need to build resilience to mitigate future risks. It has raised awareness for the unknown and the need to stay ahead of the curve.

As a result, organisations are moving from treating risk management as a compliance activity that provides assurance to boards and regulators, to one that embraces data-led insights and the role risk management has to navigate an increasingly complex risk landscape. As the risk landscape shifts, so must an organisation’s risk function and approach to managing risks evolve. These changes will put risk managers in a better position to mitigate both short and long terms risks and prepare their organisations for impact when shock events hit.

On Wednesday 20 October, Aon co-presented a panel discussion with MinterEllisonRuddWatts and Resilient Organisations to discuss strategic risk management and organisational resilience.

Below we summarise the key points from the session.

  • Our external environment is dynamic and as businesses reshape their strategies, there is a constant need to scan for new and emerging risks. At the same time, it is important to regularly review and re-evaluate the effectiveness of your existing approach to risk management to ensure it is up to date and relevant.

  • A good risk strategy integrates both insurable and non-insurable risks. It is often useful to first understand where your organisation is at on the risk maturity spectrum. A Risk Maturity Assessment is a useful way to identify gaps to inform the development of the strategy and plan.

  • Undertake an Insurance Risk Profiling exercise to help identify the risks that are insurable and those which should be transferred to insurance.

  • ESG is becoming increasingly important and now is the time to consider including ESG performance in your Enterprise Risk Management framework and risk governance. As a starting point, undertake an ESG Assessment as part of the risk framework and create an ESG register.

  • Check the efficacy of your Business Interruption cover with your broker. Pay extra attention to the Indemnity Period.

  • Keep your Business Continuity Plan, Insurable Risk Profile and Enterprise Risk Profile up to date. Consider what risks could come to fruition which could impact your supply chain.

  • When a disruptive event occurs, a combination of planning and adaptive capacity is what gets an organisation through. Planning involves both crisis management (response structure) and business continuity (resuming activity).

  • Business continuity is an ongoing journey and must not sit in silos. It can be measured through five tiers (if your organisation is sitting at the wrong tier for its risk appetite, it may be that your plans are not fit for purpose, out of date and under socialised – this will result in it not achieving the outcome you need).

  • Crisis management plan maturity can also be measured through five tiers. Crisis management needs different structures to BAU structures.

  • Think about your overall adaptive capacity – a resilience model can help you to get started by breaking resilience down into manageable chunks.

  • Business risk and business crisis often involve legal risk and legal crisis giving rise to legal problems. Be prepared by considering what can be done before and during an event.

 

Session resources

View | The webinar slides here.
Watch | The webinar recording here.

Visit | Aon Risk Management Services for more information.

Related Articles

Aon's 2021 Global Risk Management Survey

This website contains general information only and does not take into account your individual needs or financial situation. It is important to note that limits, excesses, terms and conditions and exclusions apply to the products and services outlined on this website. Please refer to the relevant policy documents for details of cover, the provision of which is subject to the insurer’s underwriting criteria that apply at the time. Please contact us if you have any questions.