Airmic’s survey report for 2020 highlights the risks and megatrends impacting organisations and provides the context in which risk professionals are operating. The report walks us through how we can navigate five risk megatrend areas and their connectivity, and the effect of a crisis such as the pandemic on other risks. Finally, the report looks at how insurance buyers, brokers and insurers should work together – especially during times of crisis. Airmic would like to thank our survey partners – AIG, Control Risks, KPMG, QBE and Willis Towers Watson – who have provided their insight to the survey conclusions and their thoughts on specific megatrend areas.
Download the full report here
Airmic conducted its annual member survey from 14 February to 31 March 2020, enhanced by qualitative input from Airmic member roundtable discussions and observations from organisations that are stakeholders in the management of risk.
- As the UK went into lockdown, risk professionals were most concerned about the risks of business interruption following a cyber event, followed by the loss of reputation and brand value – the same top two risks they were concerned about last year. Diseases and pandemics per se featured in fourth place among their list of concerns this year.
- The Covid-19 situation is an opportunity for risk professionals to demonstrate the value of their work to their organisations. They are having more contact with their senior management and are more firmly embedded in what their organisations are doing.
- Individual and corporate exposure to cyber threats is expanding at a rapid rate. Artificial Intelligence techniques, while still in their infancy, are being utilised in more state and criminal operations for faster and harder-to-detect attacks. Targeting of operational technology is increasing as outdated analogue systems digitise and converge with IT networks at corporate headquarters.
- Businesses will bear the brunt of climate change. These will cause knock-on effects that will disrupt supply chains and impact staff, ultimately leading to lost revenues and reputational damage. Yet many businesses still see climate action as external to them – something for governments instead to deal with.
- Trust and reputation have become increasingly important to businesses. With the pandemic, all businesses and organisations have been placed under additional stress. One might think they may be more easily forgiven for their errors, but consumers continue to find many corporate transgressions unacceptable.
- The nature of risks today, especially geopolitical risks, is that they are increasingly interconnected. Indeed, while much has changed, there is a surprising element of continuity in the geopolitical threats that companies face in the Covid-19 era.
- Risks in relation to governance, laws and regulation continue to exhibit a significant level of concern for risk professionals and their organisations.
- Even before the pandemic struck, the writing was already on the wall – 2020 was set to be a year of heightened unpredictability. The pandemic has brought uncertainty to a whole new level. Many of the emerging challenges, such as mitigating the effects of climate change or protecting complex digital supply chains, will require organisations to work in partnership and build collective resilience.
- The lack of adequate insurance cover, at an affordable premium, is emerging as a risk in itself. The majority of businesses are exploring alternative risk transfer solutions, including new and greater use of captives, for their 2020 renewals. Over a third of respondents plan to invest more in risk management solutions.
- The insurance industry is at the crossroads. The hardening market is already forcing businesses to look at alternative transfer options, and an ill-judged response to the pandemic could detonate the whole mix.
- It is in the interests of insurers, brokers and insurance buyers to work together openly and constructively, particularly at this time of the Covid-19 crisis.