The Global Risk Management Survey conducted by Aon in October and November of 2008 captured the views of more than 550 clients during a worldwide economic downturn. It is now available on aon.com, where you can download the PDF of the survey or request a printed copy. The previous survey, conducted in Q4 2006 with a report issued in 2007, was the first of its kind. Because of that, we were able to compare key and emerging risk issues with those revealed two years ago, and introduce new areas of concern or opportunity for businesses around the world.

The 2009 Global Risk Management Survey report comprises four main components:

• Top 10 risks
• Overall risk preparedness
• Losses related to risks
• Key business topics or functions

Aon One's summarization from the Global Risk Management Survey

Top 10 Global Business Risks

Respondents indicated clearly that the crisis impacting the global economy was the most important risk to their organizations. Other key risks cited include staying ahead of regulatory compliance; managing business interruption; meeting the challenges of increased competition; commodity price risk; protecting reputation; managing risks associated with cash flow, supply chains and third-party liability; and hiring and retaining top talent. Every one of these risks has increased in scale and complexity given the state of the current economic environment.

Risk Preparedness

In general, most organizations have increased their preparedness for global business risk. Compared with the 2007 survey, overall risk preparedness for the top 10 risks has increased from 60 to 70 percent. However, for three of those 10 risks—economic downturn, damage to reputation and regulatory/legislative changes—fewer than 66 percent of respondents indicated they have formally reviewed that risk or have a plan in place to deal with it. These three risks are complex and difficult to control, carry a degree of unpredictability and impact the entire enterprise. Though difficult to manage and substantially not insurable, the risks must still be addressed and require innovative, forward-looking solutions.

Risk Management Departments and Functions

The 2009 Global Risk Management Survey revealed that companies are cutting back on resources and shrinking risk management departments while trying to sharpen the focus and strengthen the infrastructure of these teams. The growing need to manage risk on an enterprise-wide basis does not seem to have prompted more firms to create the chief risk officer (CRO) role. However, managing risk on an enterprise-wide basis continues to escalate in importance. Given the increasing complexity of risk for organizations of all sizes, the implementation of a proactive, more holistic approach to the process becomes even more critical. This, combined with lean in-house staffing, continues to drive reliance on third parties for select insurance and risk management activities.

Identifying, Assessing, Measuring and Managing Risk

Fewer than half of survey respondents report tracking and managing their total cost of risk (TCOR). This trend most likely reflects shrinking risk management departments and top management’s time spent addressing key risks. However, without adequate risk monitoring and measuring processes in place, TCOR will be difficult to manage effectively. Even with risk management resources stretched thin, organizations will need to take a closer look at tracking and measuring TCOR. Reliance on senior management’s intuition and experience is still the most common way organizations identify risk, but this method may miss new risks.