Based on a global survey of nearly 1,000 organizations, the report highlights large disparities in the perception of and response to threats posed by pandemic, cyberattack, emerging technologies, climate change/environmental, social, and governance (ESG)-related issues, regulatory changes, and geopolitical risks.
While 75% of respondents to the survey believe that their risk management and insurance buying processes are aligned to their long-term growth strategies, only 25% have a comprehensive or formal process in place to evaluate and model the impact of these emerging risks on their business. This comes despite respondents overwhelmingly identifying these six key emerging risks as increasingly critical, long-term threats to their organizations’ success.
The findings suggest a significant perception gap with firms’ risk management functions prioritizing short-term threats over those that are high severity but lower frequency. This potentially leaves them vulnerable to immediate and long-term disruptions to their operations, assets, and revenue streams, the report concludes.
As new challenges continue to emerge, and the risk landscape grows increasingly complex, the report identifies the competitive advantage that risk resilient firms can gain. A risk resilient organization is able to anticipate risk, minimize losses, and quickly resume business as usual following an event, gaining a competitive advantage over less-prepared peers through growth opportunities seized during times of operational and/or financial stress, the report notes.
“The COVID-19 crisis, the temporary closure of the Suez Canal, major cyber-attacks, and other recent events, have all exposed the fragility of global systems and serious shortcomings in organizations’ preparedness to manage major crises,” said John Doyle, President and CEO, Marsh. “As our report outlines, effective strategies to build more resilient businesses will not only facilitate faster recovery but also increasingly become a competitive advantage.
“Our survey findings show that more work needs to be done when it comes to anticipating and modeling key emerging risks as they develop,” Mr. Doyle added. “Resiliency is a journey that organizations need to prioritize.”
According to the Marsh Risk Resilience Diagnostic, the journey towards resilience involves four common steps and behaviors: anticipating important risk issues; connecting risk management to business strategy; avoiding gaps in the perception of preparedness; and measuring relevant data. Together, these steps can transform risk management and support organizations in becoming more resilient, Marsh notes in the report.
Marsh Risk Resilience Diagnostic and Report
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