With five straight months of improving employment numbers across the nation, it seems as though real economic recovery is fully underway. Overall, the consensus among economists believes that the U.S. GDP will grow 2% in 2011. Throw in the continued growth for emerging market powerhouses like Brazil, Russia, India and China, and the worldwide picture looks a lot rosier than it did just 12 months ago.
Still, for executives across the world, a sluggish economy remains the greatest risk they see for their organizations. It ranked first for the nearly 1,000 business professionals from 58 countries surveyed for the 2011 Global Risk Management Survey that Aon unveiled yesterday at RIMS 2011 Vancouver.
The top ten included several other familiar threats on the rise during the past few years (regulatory risk, commodity prices, liquidity), but it also seem to reflect a strategic risk outlook that was surfacing just before the economic crisis monopolized the world’s attention in 2008. Specifically, the worries over failing to attract top talent (which, in the graying-by-the-minute insurance industry at least, I presume includes attracting young talent) and failing to innovate involve looking at the far-off risks a few years down the road that the company must navigate not just to improve its bottom line for 2011, but to ensure the company can retain — and increase — market share in the future. The newspaper and music industries, to name two, are probably wishing they had put “failing to innovate” on their radar screen around the turn of the millennium.
Here’s the full list:
- Economic slowdown
- Regulatory/legislative changes
- Increasing competition
- Damage to reputation/brand
- Business interruption
- Failure to innovate/meet customer needs
- Failure to attract top talent
- Commodity price risk
- Technology failure/system failure
- Cash flow/liquidity risk
I’ve been seeing these top ten risks lists for the past seven years, and it’s always interesting to note how they change over time. Some concerns never leave (like technology risk) while others have appeared with increasing frequency and continually moved higher up on in the rankings (like reputation risk).
Based upon all the conversations I’ve had so far in Vancouver, I would be willing to bet good money that supply chain risk cracks the 2012 list. And, hopefully for everyone’s sake, the threat of economic slowdown is one that seems much less likely.