10 biggest worries of global businesses
In a world of globalized business, companies have the opportunity to increase their scale. But they also face increased degrees of risks on many fronts. These days, the top concern of executives doing business around the world is the potential damage to brand and reputation, according to a new survey from risk management company Aon Risk Solutions. This is the first time that particular worry rose to the top since Aon began running this biennial survey in 2007.
Interviews with 1,418 companies around the world found the following 10 issues to be the most worrisome for global executives this year:
- Damage to reputation/brand
- Economic slowdown/slow recovery
- Regulatory/legislative changes
- Increasing competition
- Failure to attract/retain top talent
- Failure to innovate/meet customer needs
- Business interruption
- Third-party liability
- Cyber-risk (computer crime/hacking/viruses/malicious code)
- Property damage
The second item shows that companies still aren't comfortable with the pace of global economic improvement. However, such concerns finally moved from first place to second.
As worries about the world economy have abated, even if only a bit, longstanding concerns about such factors as reputation damage, competition, attracting and retaining talent, and business interruption "are taking on new dimensions and complexities," according to the Aon report.
"What's key is understanding the components of that risk [and] the connection with other risk," Rory Moloney, chief executive officer of Aon Global Risk Consulting, told CBS MoneyWatch. Executives should understand "risk in its [divisional] silo and also its exposure across the enterprise."
In the case of business interruption, companies now have to manage and protect global supply chains, in which an intricate set of suppliers and delivery routes brings together all the components for a product. A natural disaster, war, labor strike or other issue in one part of the world can disrupt the movement of goods with a chain of economic implications in multiple countries and among many different companies.
This is the first year that concerns over computer crime, hacking and malware have landed in the top 10, which is an interesting occurrence given how reputational damage is perceived as a byproduct of a digital attack and major cyberbreaches have been regular news for years.
As Sony (SNE), Home Depot (HD), Target (TGT) and plenty other big companies have learned, inadequate preparation for a cyberattack can result in ugly press and apparent reputational damage.
However, risk management can involve allowing something to happen because the costs to prevent the problem are greater than the perceived costs of the results. For example, many companies don't fix cybersecurity issues because the quantifiable financial downside is relatively tiny. According to the Ponemon Institute, Sony's reputation took a beating a few years ago after a major breach of its networks and the loss of large amounts of personal customer information. But in less than six months, things were back to normal.
Still, as the latest Aon survey found, the topic of cybersecurity has risen to the top 10 list of executive concerns.