Reputation risk is the #1 concern for UK Retail

reputationAon plc, the leading global provider of risk management and human resource consulting and outsourcing, has revealed the findings of a joint survey uncovering the top risk factors facing retailers in the UK.

The Aon/BRC National Retail Risks Survey 2016 formed the talking points for today’s keynote panel session at the BRC Retail Symposium and found that UK retailers are increasingly concerned about the risk of ‘Damage to reputation and brand’, with almost three quarters confirming it is either a ‘High’ or ‘Very High’ threat to their business. The findings suggest reputation is a growing worry for UK retail specifically. Aon’s previous 2015 Global Risk Management Survey placed damage to reputation as the second greatest risk amongst retailers worldwide.

“There’s a growing body of evidence that retailers view their reputations as their most important trading asset,” says Richard Waterer, EMEA managing director of Aon Global Risk Consulting. “Brand is an increasingly significant asset which retailers are able to identify, value, assess and manage. Given that our survey revealed two external and largely uncontrollable threats – ‘UK Economic Change’ and ‘Increasing Competition’ – as the second and third highest rated risks, it’s very interesting that brand protection has now taken on such importance in the industry.”

Helen Dickinson OBE, chief executive of the British Retail Consortium said: “The rise of brand protection and reputation to become the top risk is not surprising given a market which is more competitive than ever before. Against a backdrop where industry profitability is falling and retailers grapple with falling shop prices, rising costs and effectively implementing the National Living Wage; managing the expectations of customers, employees, shareholders and other interested parties is more important than ever.”

Richard Waterer continues: “Any number of factors can lead to a tangible fall in the value of your brand, and the last thing anyone wants is for a situation which could and should have been controllable, to have the opposite effect and impact your business to the detriment of everyone. Sadly there have been examples in recent years where situations have escalated and led to considerable reputational damage, causing genuine financial loss to businesses.

Beyond the issue of reputation, the survey reviewed a broad range of risk factors, with a selected focus group of retailers answering questions on 65 potential threats to their business. External and corporate risk factors dominated the top 15, but human resource and technology challenges also featured heavily. Attracting and retaining top talent came fourth, significantly higher than in previous Aon surveys, while the threat of cyber-crime or data breach came 6th, a lower position than Aon’s Global Risk Survey in 2015, possibly reflecting a lower perceived threat amongst UK retailers than their counterparts in the US.