SYDNEY (27 June 2013) - An evolving understanding of a significantly changed operating landscape is leading to changes both in the way organisations define risk – and the way they address it.  In Global terms, Australian and New Zealand companies are ahead of the pack, taking a more structured approach to tackling a growing number of issues than many of their international counterparts.

These are just a few of the deeper findings of Aon’s 2012/13 Australasian Risk Survey. The eleventh annual survey involved 133 Australian and New Zealand companies across 19 industries. And a number of its findings demonstrate a focus on entirely new risks.

“It is highly interesting to see how innovation, or a lack thereof and technology systems failure have now entered the top 10 risk concerns for Australasian organisations,” said Jason Disborough, Managing Director, Global, for Aon Risk Solutions Australia.

“In an economic environment where organisations are fighting for growth, we are seeing that a general ability to adapt and respond strategically to change are more critical than ever.”

Mr Disborough went on to cite a host of new challenges arising from changed technological, regulatory and environmental factors that barely even made it onto the risk landscape a few years ago.

“Technology has brought with it an enormous change in the way we do business – which translates directly to a whole new set of risks that we are only just beginning to grapple with, for example,” he said.

Even aside from the impact of technology-fuelled social media on brand and image – which ranked as the number one concern in the Australasian survey – other major technology-related issues such as lack of innovation, technology or system failure and lack of technology infrastructure to support business needs, are all creeping into the top 20 concerns – and some much higher.

Mr Disborough said that, given these technology-based concerns, Aon was surprised to see that Cyber Risk did not make the top 20 rankings – especially in the face of upcoming privacy and other legislative change likely to call into question the integrity of many organisations’ information management systems.  

“I think it’s fair to say on the basis of our own research and consultancy that many organisations are underdone when it comes to cyber risk. We expect a growing move to address this once there’s greater awareness of the practical impact of privacy laws and how they mesh with new technology such as cloud-based systems,” he said.

Liability issues arising from other forms of regulation are also playing an increasing role in reshaping the risk landscape.

“Risks  for company directors are almost unrecognisable from what they were 10 years ago, with sanctions from fines through to incarceration now on the table for a range of breaches across a numerous areas, in particular occupational health and safety,” Mr Disborough added.

He also flagged that while the higher ranking of natural disasters as a risk was understandable due to events such as the Christchurch earthquakes, and floods and bushfires fires in many parts of Australia, these may well continue to grow alongside concerns about climate change and its ultimate long term impact on our living and working environments.

While there are undoubtedly significant challenges ahead, the survey showed that, in global terms, Australian and New Zealand companies are increasingly well placed to address them.

“It’s heartening to see that despite strong economic headwinds, Australasian organisations continued to increase their investment in risk management and risk mitigation at above global averages,” he said.

“This year, for example, 70% of organisations surveyed reported that they have a formal risk management or insurance department, which is 10% higher than last year’s survey, and 12% higher than the global average of 58%,” he explained.

Mr Disborough also pointed out that research shows a positive correlation between advanced risk maturity and the ability to add greater shareholder value for organisations. A separate study conducted by the Wharton School of Business and Aon from 2010–2012, identified that those organisations with the highest Risk Maturity Rating (5.0 – Advanced) exhibited a stock price volatility 50 percent lower than the group of organisations with the lowest Risk Maturity Rating (1.0).

Mr Disborough concluded by saying that the aim of the survey had always been to provide Aon clients with deeper insights into risk management and risk financing trends.

 “The fact that the survey continues to uncover new risks really reinforces the need to remain vigilant and open to the broader implications of the rapidly changing environment in which we operate.” 

<<ENDS>>

About Aon Australasian Risk Survey 2012/13

Now in its 11^th year, the Australasian Risk Survey gives Australian and New Zealand organisations a snapshot of how their risk management practices measure up against their industry peers and competition.

The survey report reflects the responses of 133 unique Australian and New Zealand businesses across 19 industries surveyed between October and November 2012. The businesses include representatives from the public, private and not-for-profit sectors.

The Australasian survey was run in conjunction with the Aon Global Risk Survey, which was completed by 1400 organisations across 70 countries. Response rates from Australia and New Zealand were the highest globally.

Respondent organisations are placed in three broad revenue bands:  27% less than $100 million; 38% between $100 million to $1 billion; and 35% of respondents more than $1 billion.

Typical respondents were Chief Financial Officers (15%); Risk Manager or Insurance Manager (40%) and Chief Risk Officer (16%).  

About Aon

Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 65,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon’s global partnership and shirt sponsorship with Manchester United.

Media contact:

Sophie Schuler
BlueChip Communication

Tel: 02 9018 8628
Email: sschuler@bluechipcommunication.com.au