Aon’s global report found that prior to COVID-19 82 per cent of respondents said a pandemic or other major health crisis was not a top 10 risk on their organisation’s risk register. At the time of Aon’s Global Risk Management Survey in 2019, pandemic risk was ranked 60 out of 69 identified risks. Enterprise risk management strategies and management teams were therefore unable to rapidly respond to the threat of the pandemic and, when it hit, their risk infrastructure struggled to cope with the initial response.
In Australia, existing and emerging long-tail risks will continue to challenge organisations across all industries, and the pandemic, its economic devastation and a hardening insurance market are pushing organisations to build a new enterprise risk management strategy.
The report further identified differences in how businesses have responded regionally; prior to COVID-19, 52 per cent of respondents in Asia Pacific had a pandemic plan in place, compared with approximately 30 per cent in the rest of the world.
“There is no question that the COVID-19 pandemic will change the way companies operate forever. Our research shows that protecting people and assets emerged as a top concern, with many companies focused on well-being, operational resilience and the retention of key people. There is also a clear need to build a more integrated, agile and enterprise-wide risk program, as companies are likely to find gaps in their strategy and in the market. Equally important is that the insurance industry innovates in response to companies’ changing needs, increasing global volatility and emerging risks. Successful insurance solutions in the wake of the pandemic will be more agile, strategic, targeted and scalable.” – Jennifer Richards, Managing Director – Specialties at Aon in Australia.
Going forward, risk and business leaders must reprioritise risk—broadening their perspective and evaluating major shocks, not just anticipated losses, and elevating risk managers to an enterprise-level strategic role. By doing so, they will also be able to redefine resilience. Together, these are the post-COVID imperatives required to reshape businesses into a more future-ready posture.