The proportion of organisations worldwide that feel fully prepared to deal with the main risks they face has fallen over the past two years, according to research published by Aon Risk Solutions today.
The consultancy's 2013 Global risk management survey found that, on average, 59% of public and private sector organisations reported being ready to deal with the top ten risks they face, compared to 66% in the same survey two years ago. Aon defines risk readiness as having a comprehensive plan in place to address risks or the completion of a formal review of those risks.
At the same time, the average loss of income respondents reported as having resulted from the top 10 risks increased from 28% in 2011 to 42%.
Of the 28 industries covered by the report, only three - pharmaceutical and biotechnology, non-aviation transportation manufacturing, and agribusinesss - reported the same or improved levels of readiness compared to two years ago.
Stephen Cross, chair of Aon Global Risk Consulting, said: 'One possible explanation of the decline in risk readiness could be that the prolonged economic recovery has strained organisations' resources, thus hampering the abilities to mitigate many of these risks.'
The report noted, however, that it could also be evidence of growing risk awareness among companies which had previously had an 'inadvertent false confidence' about their risk readiness.
'They might have put in place plans to address the risks but discovered later that those plans were inadequate or unworkable,' the report explained. 'In other words, companies are becoming more knowledgeable and pragmatic in the understanding of their true exposure to risk.'
In terms of the biggest risks facing organisations, the economic slowdown and slow recovery was identified again as the top risk, as was the case in the two previous surveys in 2011 and 2009. Respondents also ranked it as the biggest risk they expected to face in 2013.
Regulatory and legislative change was seen as the second biggest risk, both now and in three years' time, while increasing competition ranked third in both lists.
All three were among the top risks for 24 of the 28 industries surveyed and took the top three spots on the rankings for each of the survey's five main geographic regions. This reflects the systemic nature of these risks and the high interdependence of global economic activity, Aon said.
