Most organizations are not prepared for emerging risks: Marsh
Advisen
Most organizations are not prepared for emerging risks: Marsh
By Rebecca Gainsburg, Advisen
The vast majority of large and midsize organizations are underprepared for the rising threat posed by a variety of emerging risks, creating a competitive advantage for risk resilient firms, according to results of a recent Marsh survey.
“The COVID-19 crisis, the temporary closure of the Suez Canal, major cyberattacks, 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 at Marsh, in a statement.
Six emerging risks were identified in the survey: pandemic, cyber, emerging technologies, climate/environmental, social, and governance (ESG), regulatory, and geopolitical. Although these risks have existed for a long time, the threat landscape continues to evolve, increasing in magnitude, velocity and interdependent impacts. Just 25% of surveyed companies had a comprehensive or formal process in place to evaluate and model the impact of these emerging risks on their business, Marsh found.
The majority of companies recognized the importance of these risks. Cyber, pandemic and regulatory risk were listed as “important” or “most important” by more than 90% of companies, and emerging tech fell just below this mark. Geopolitical risks were ranked as the least important emerging risk by one-third of surveyed companies, focusing mostly on supply chains. Fallout from COVID-19 travel restrictions, trade disputes and regional political events were largely overlooked, despite the increasing complexity these issues are expected to pose long into the foreseeable future, said Marsh.
“The interconnected nature of risk means that whether or not there is a direct relationship to business impacts, geopolitical forces act as an accelerant to other events, including trade/tariffs, security, climate, and cyber events,” said the authors of the report.
An expansive, forward-thinking view of risk management and resilience is essential for an organization’s future, and offers companies a competitive advantage over peers if they are able to seize opportunities in times of financial or operational stress, said Marsh. Resilient companies are able to anticipate important risk issues, connect risk management to business strategy, avoid gaps in perception of preparedness, and measure relevant data.
“Our survey suggests that many respondents place too much emphasis on the importance and impact of certain perils, primarily pandemic risks. They do not place enough emphasis – under-indexing – on other risks with significant potential impact, and are not modeling for these emerging risks. These are areas that organizations should assess carefully, prioritize accordingly, and aim to drive alignment across core business owners and operations,” said the authors of the report.
