Aon have announced the results of its 2022 Executive Risk Survey, "Making Better Decisions in Uncertain Times." The survey clearly shows that leaders who are making better decisions about risks are better prepared to navigate through and succeed during highly volatile times and economic uncertainty.
Aon conducted more than 800 interviews with C-suite and senior executives at companies with 500+ employees to answer questions related to: What attributes set leaders who are very prepared for a recession apart? How are they making better decisions to position their companies for growth at this pivotal time?
A strong majority (79 percent) of business leaders expect a recession this year. A highly select group of leaders—just 35 percent—report feeling very prepared for that recession.
"Strong, prepared leaders are essential to protecting an organization's resilience and finding growth opportunities in the face of heightened volatility," said Greg Case, chief executive officer of Aon. "This year's report reveals that leaders who are very prepared to weather economic challenges embrace calculated risk-taking as an engine of growth."
Business leaders who are very prepared for a recession share four fundamental attitudes toward preparedness:
• Embracing risk is the only option. Sixty-two percent of very prepared leaders agree that their company's appetite to address risk has increased in response to the current macroeconomic conditions. For companies that feel very prepared heading into a recession, addressing risk isn't a choice — it's a question of survival.
• Analysis and advice from internal and external stakeholders is vital in making better decisions. Very prepared leaders are nearly twice as likely to say they value the counsel of an external advisor to improve their company's ability to make good decisions and deal with risk. Confident leaders are also resisting the urge to slow hiring despite challenging economic conditions. In fact, 42 percent of very prepared leaders are spending a great deal of time on the issue of attracting and retaining top executive talent, compared to just 22 percent of other leaders.
• COVID-19 has shown that risks are interconnected. Sixty-one percent of very prepared leaders agree that risks are interconnected, drawing on their experiences during the COVID-19 pandemic. A strong majority (73 percent) of the best-prepared leaders strongly believe that the pandemic prepared them to respond quickly to emerging risks, giving them added confidence as they head into a recession.
• Don't hit the brakes on long-term investment — or ignore long-tail risks. The top five risks that all business leaders report they are most focused on are: inflation, a financial crisis, energy supply, cyber attacks and supply chain disruptions. In addition to addressing these risks, very prepared leaders are also looking ahead and spending more relative time than other leaders on longer-term challenges like economic/social inequality, disruptive technologies, crypto and blockchain. Similarly, about half (49 percent) of very prepared leaders are spending a great deal of time on climate change, compared to just 26 percent of other leaders.
"Climate risk is not a probability, it is a certainty and severe weather is becoming more and more a part of everyday life," added Case. "What this research shows us is that while climate change is one of our greatest challenges, it could also be one of our greatest opportunities. It is the ultimate example of the interconnectivity of risk. More companies are looking at the challenges caused by climate change beyond regulatory compliance and reputation management and are digging into the related risks where the impact is immediate and measurable – business interruption, material scarcity, supply chain issues and reputation damage. And we are seeing that the leaders who are investing more time and resources to the challenge are better prepared as a result."
The survey was conducted online from Sept. 2-15, 2022 by 815 C-suite, partner, senior executive and executive respondents at companies with 500+ employees across diverse industries in the United States, Canada, the United Kingdom, Germany, France, Italy and Spain. The survey builds upon the 2020 research, "Are You Prepared for the Next Big Threat?" and 2021 research "A New Approach to Volatility: The Importance of Making Better Decisions."
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