Aon has released the findings of its inaugural Business Decision Maker Survey, which found that 72 percent of business decision makers feel their businesses aren’t moving fast enough to address risks associated with global megatrends across four key areas of trade, technology, weather, and workforce.
The survey, which gathered insights from C-suite and business executives in North America, UK and Europe, found that 86 percent believe it is important to address the challenges and opportunities presented by these megatrends. However, it is getting harder to make the right decisions amid their growing complexity and volatility.
The majority of the survey’s respondents identified all four megatrends as extremely important to their organizations. However, the survey also revealed that trade, technology, and workforce ranked as bigger priorities (with 80-plus percent of the respondents rating them as ‘extremely important’) while 70 percent of those surveyed ranked weather as a top-priority risk.
Other highlights of the survey include:
Trade
Business decision makers say that risks linked to trade are some of their top concerns — both physical and financial. The survey results highlight that supply chain risks are top of mind in the C-suite, with 74 percent of business decision makers saying that their responsibility for supply chain or distribution functions has increased over the last year. On top of that, economic and financial concerns remain a focus for business decision makers, with exchange rate fluctuations and commodity price risk among the top three trade risks.
Technology
While advancements in AI and data and analytics offer businesses a significant competitive edge, they also generate new and evolving risks. Business decision makers recognize the importance of fully analyzing and assessing risks associated with technology, with 63 percent reporting that they have measured the ROI of cyber security initiatives and 61 percent auditing IT suppliers to manage third-party risks and IT sprawl in the last year.
Weather
Extreme weather and a changing climate are impacting many of the risks businesses face today. 66 percent of business decision makers understand that climate issues raise new risks and vulnerabilities that require a significant change in how businesses think about the future. However, compared with the other three megatrends, decision makers are slower to act on weather risk. While 59 percent of those surveyed are quantifying the financial impact of extreme weather, 72 percent are carrying out the same exercise for cyber.
Workforce
Organizations are increasingly balancing costs with the ability to provide a compelling employee experience. Rising workforce costs are among the largest challenges business decision makers face, the survey finds, with 57 percent saying their company has materially changed benefit or health care offerings for employees to improve affordability and improve outcome. Business decision makers also ranked adjusting their talent strategies to account for changes in technology as their top workforce concern. Meanwhile, 52 percent of decision makers have taken action over the last year in reskilling or upskilling workers for the new demands of green technology and renewable projects and 45 percent say that climate issues are helping create a mission-driven culture that attracts and retains talent.
The survey also revealed key differences in risk preparedness between organizations in the US and those in Europe and the UK. For example, 48 percent of US business decision makers select supply chain disruption as a top trade risk, compared with 27 percent in the EU and UK. Meanwhile, 44 percent of decision makers in the EU and UK see war and political instability as a top trade risk, compared with 28 percent in the US.
Regarding weather risks, 47 percent of business decision makers in Europe and the UK are prioritizing decarbonization and clean energy, compared with only a third (33 percent) in the US. However, US leaders are paying more attention to workforce safety related to heatwaves (45 percent in the US, compared to 40 percent in the EU and UK) and property damage caused by natural disasters (37 percent in the US, compared to 33 percent in the EU and UK).
It’s clear that without taking action, business decision makers will not be able to effectively manage their exposures to these megatrends over the next year. As the megatrends grow more interconnected, businesses which adopt a comprehensive, data-driven, forward-looking approach to risk management will more confidently address challenges and seize opportunities amid uncertainty.
Eric Andersen, President, Aon
