LONDON--(BUSINESS WIRE)--
Busy management teams are struggling to keep pace with a range of new
and emerging risks that pose significant financial risks to their
business, according to new research published today by ACE Group.
Lack of management attention, compounded by lack of skilled resources,
management tools and processes, is hampering companies’ ability to
manage a range of new and emerging risks, according to a survey of 650
companies in Europe, the Middle East and Africa conducted for global
insurer ACE’s EMEA Emerging Risks Barometer 2013. In the survey, company
leaders identify supply chain/infrastructure, environmental, cyber and
D&O1 as the “big four” risks most likely to cause
financial damage to their businesses in the next two years.
Andrew Kendrick, President, ACE European Group, said:
“Our research suggests that emerging risks have not yet become embedded
in board level discussions on wider risk management issues. 57% of our
respondents cite lack of management attention as the biggest barrier,
and this leads in turn to the second and third challenges – lack of
human resources and lack of risk management tools and processes.”
Biggest barriers to emerging risk management
According to the survey, at least 40% of companies view supply chain and
infrastructure dependency, environmental liability, cyber risk and D&O
liabilities as the emerging risks likely to have the most significant
financial impact on their company in the next two years.
Emerging risks that companies believe will have the most significant
financial impact on their business in the next two years (% of
respondents):
45% of businesses say that they expect supply chain and
infrastructure risk to have a significant financial impact on their
company over the next two years. Sophisticated global supply chains have
driven down costs for many companies, but businesses are paying the
price through a lack of visibility into where risk exposures lie.
Compounding these issues, many companies are reliant on creaking civil
infrastructures, the security of international energy and power supplies
and other challenges which expose them to severe financial risks in the
event of business interruption.
Environmental risk ranks second, with 42% categorising it as one
of the emerging risks most likely to have a negative financial impact on
their business. With tougher government regulation and more vocal
stakeholder concerns, companies are being held accountable for their
environmental impact as never before. The fact that environmental risk
ranks second overall also suggests an increasing awareness that it is an
issue for all sectors, not just traditional ‘polluting’ industries.
Nearly three quarters (73%) of firms say their shareholders are taking
environmental risk more seriously.
Respondents rank cyber risk joint third, with 40% viewing it as
one of the emerging risks most likely to affect their business. In
recent years, cyber risk has become virtually unavoidable as
companies become increasingly dependent on technology to do business.
Over a third of companies cite viruses (49%), hacking (38%) and data
theft by third parties (37%) among their greatest concerns. However, the
majority of companies also recognise that the greatest threat often
comes from within. 63% of firms believe that employees and internal
failures can often pose a bigger threat than cyber criminals.
Although not a new risk, directors and officers (D&O) liability risk
is constantly evolving against the backdrop of financial crises,
changing regulation and growing international footprints. It ranks joint
third, with 40% of companies believing it could present a significant
financial threat over the next two years. Notably, in the wake of
increased scrutiny post-crisis, respondents highlighted reporting errors
as their greatest worry, followed by concerns about exposures to
bribery, fraud and corruption.
Andrew Kendrick, President, ACE European Group, said:
“We know that real world events do not respect neat categories, and that
many of our emerging risks are interconnected today. By paying greater
attention to this complex and interlinked array of emerging threats and
challenges, risk managers can help their organisations to put their
strategic plans on a sustainable footing. And, by working with them in a
collaborative way and taking a strategic approach to their client
relationships, insurance brokers and underwriters can help them ensure
that these emerging threats become an integral part of their approach to
enterprise-wide risk.”
ACE’s EMEA Emerging Risk Barometer includes detailed information and
statistics on all these risk categories, information on how different
industry sectors view risk and extensive commentary on the management of
emerging risks. It can be downloaded at: www.acegroup.com/emergingrisks
-ENDS-
About ACE:
ACE Group is one of the world’s largest multiline property and casualty
insurers. With operations in 54 countries, ACE provides commercial and
personal property and casualty insurance, personal accident and
supplemental health insurance, reinsurance and life insurance to a
diverse group of clients. ACE Limited, the parent company of the ACE
Group, is listed on the New York Stock Exchange (NYSE: ACE) and is a
component of the S&P 500 index.
About the ACE Emerging Risks Barometer:
ACE, in collaboration with Longitude Research, conducted a survey of 650
senior executives with responsibility for risk management across a range
of industries and 15 countries in the Europe, Middle East and North
Africa region. Respondents were from larger companies (above $1bn in
annual revenues) and mid-size companies (ranging from $250m to $1bn in
annual revenues). This survey was conducted by telephone in summer of
2013 by Longitude Research on behalf of ACE. More detailed interviews
were also conducted with a range of senior corporate risk managers and
others with expertise in the field of risk management.
1 Legal action against the company’s directors and officers
(D&O), usually taken by company stakeholders, business partners or
regulators.
Source: ACE