Aon plc, the leading global provider of risk management and human resource consulting and outsourcing, has revealed the findings of its latest Global Risk Management Survey, uncovering the top risk factors facing retail and wholesale businesses.
The results show that increasing competition remains at the top of the industry’s worries as was the case in 2013, but the potential for damage to the brand and reputation is now second, having risen up from seventh place in the previous survey.
Economic slowdown also remains within the top three risks, and Norman Andrew, executive director at Aon, says retailers’ continued concern over this and their competitors reflects a challenging picture: “The UK’s retail industry had the best sales performance since before the recession in 2014. The sector’s sales grew by around 2.3% last year but it is still experiencing a number of high profile challenges. The results of Aon’s Global Risk Management Survey paint a very clear picture of the concerns amongst risk managers in the sector and reflect the changing environment in which they work.
“In the majority of cases, retail and wholesale companies understand the risk factors of a competitive market. Respondents have highlighted it as the top worry for the second time and over 50% admit that their businesses have experienced losses caused by competitive pressures.
“However this contrasts with another key factor, the threat posed by reputational damage; while it has climbed to the second position in the survey’s Top 10, only 3% have accounted any losses caused by this risk.”
The Aon Global Risk Management survey reviews more than 50 financial, operational, external and human capital factors to assess which of those features most commonly on the risk registers of various industry sectors.
The biggest riser in the survey table was cyber, reflecting a rapid increase in costly data breaches affecting the retail industry. Norman Andrew says: “Although only 4% of businesses have accounted for losses due to computer crime, it is a worry that has prompted over 80% to implement plans in mitigation. As the market faces up to the pending EU General Data Protection Regulations, it is therefore no surprise that retail and wholesale companies believe cyber risk will be a top three risk factor three years from now.”
|Aon’s Global Risk Management Survey 2015Top 10 risk factors across global retail and wholesale firms|
|Risk Factor||Retail & Wholesale 2013||Retail & Wholesale 2015||Overall 2015||Plans in place to mitigate? R&W||Plans in place to mitigate? Overall||Resulted in loss during past yr?(R&W)|
|Damage to reputation/brand||=7||2||1||64%||56%||3%|
|Computer crime/hacking/viruses/malicious codes||22||4||9||82%||82%||4%|
|Distribution/ supply chain failure||10||5||14||57%||63%||22%|
|Failure to innovate/meet customer needs||=7||6||6||71%||60%||38%|
|Failure to attract or retain top talent||15||8||5||60%||60%||13%|
Global retailers and wholesalers fight back as competition bites
|Aon Global Risk Management Survey 2015Top 5 risk factors three years from now|
|Risk Factor||Retail & Wholesale 2015||Overall 2015|
|Computer crime/hacking/viruses/malicious codes||3||7|
|Damage to reputation/brand||4||5|
|Failure to innovate/meet customer needs||5||4|
Download the full report from Aon here.