Revealed: less than two-thirds of businesses worldwide are confident about risk management

Revealed: less than two-thirds of businesses worldwide are confident about risk management | Corporate Risk & Insurance

Revealed: less than two-thirds of businesses worldwide are confident about risk management

Economic, cyber, technological and political risks are the primary concern of business leaders worldwide in terms of threat perception.

That’s the verdict of the latest edition of CNA Hardy’s Risk and Confidence Survey, which reveals that only 59% of business executives worldwide are currently confident about the ability of their business to grow and prosper, with 70% of leaders in Continental Europe expressing confidence, well ahead of those in North America (64%), Asia-Pacific (53%) and the UK (39%).

“However, what is interesting to note is that no matter what their confidence levels are, executives in every single region are prioritising international expansion to fuel growth,” CNA Hardy CEO Dave Brosnan said. “While this bullish approach is positive from a business perspective, growth should be treated with caution.

“Increasingly protectionist economic policy could undermine companies’ international growth ambitions. Executing a global growth strategy is much harder against political and economic headwinds,” he noted.

The study revealed that executives globally are also showing a strong preference for technology and R&D investments over investments in people, with 74% prioritising technology spend and 70% R&D spend in order to support top-line growth. This shift has also altered risk perceptions, making technology a global top three risk, with 14% ranking it as their top risk now and 37% suggesting the risk will increase in six months’ time.

“Our data suggests that SMEs are not viewing cyber as a priority as they appear to feel less vulnerable to the risk,” Brosnan added. “This is a false impression, and insurers need to do more to highlight the risk of cyber to businesses of all sizes.”

With economic (22%), cyber (19%) and technology (14%) ranking as the top three business risks, the study suggests these are global, inter-connected and complex factors and companies need more than traditional financial and legal skills if they are to manage these risks. CNA Hardy suggests companies must focus on leadership, culture and strategy to stay ahead.

“Large losses today are caused by the same drivers as 20 years ago – fire and flood,” Brosnan explained. “If businesses cannot master these more obvious risks, inevitably they will struggle when faced with more complex, global and interconnected risks. Leadership, culture and strategy are key as insurers get better at understanding and responding to these risks and communicating what needs to change.

“Risk management is as much about service and support as it is about balance sheet risk transfer, and for that to work effectively there has to be better dialogue between clients and the industry.”