Cyber-attacks are regarded as the biggest risk in Australia, and globally, according to a survey of the country’s insurers by insurance broking and risk management group Aon. Looking forward three years to 2024, cyber is also expected to remain the biggest threat.

In its 2021 Global Risk Management Survey, Aon comments that concerns over cyber reflect justified the sharp escalation in the severity and frequency of attacks on businesses by hackers, who are using increasingly sophisticated methods to lock or steal data for ransom payments.

Australia’s top five risks 2021

1. Cyber-attacks/data breach
2. Damage to reputation/brand
3. Failure to innovate/meet customer needs
4. Business interruption
5. Failure to attract or retain top talent

Australia’s anticipated top five risks 2024

1. Cyber-attacks/data breach
2. Failure to innovate/meet customer needs
3. Damage to reputation/brand
4. Economic slowdown/slow recovery
5. Increasing competition

Respondents to the 2021 Australia survey identify the sixth to 10th biggest risks as: regulatory/legislative changes, economic slowdown/slow recovery, cash flow/liquidity risk, pandemic risk/health crises and increasing competition.

Current business risk issues

The report notes that before the Covid-19 pandemic struck Australia in early 2020, the country had suffered only one technical recession in the past 30 years. The impact of the pandemic recession was muted by the Australian government’s stimulus programmes whose financial impact will be felt by future generations. This could explain why economic slowdown and slow recovery does not currently rank among the top four risks in Australia, as it does in similar surveys conducted in other countries

However, distressed global supply chains, geopolitical tensions and continued uncertainty surrounding the post- Covid-19 recovery could make Australia’s national business environment more vulnerable to economic shocks. Indeed, this is evident in respondents’ assessments of future risk, with economic slowdown and slow recovery moving to fourth place for anticipated top risks in 2024.

Underrated risks

The 2021 survey suggests that commodity price risk and scarcity of raw materials is an underrated risk for the region. Australia’s entire economy depends heavily on key commodities, such as coal and will be hard hit by diminishing or even disappearing demand as pressure from environmental, social and governance (ESG) regulations aim to phase out fossil fuels.

Geopolitical situations are also an important factor with this risk, particularly China’s determination to reduce its dependence on Australian iron ore, colour this risk. If coal or iron ore production were to cease across Australia, the economy would plunge into recession. The growing importance of ESG as an economic influencer in the developed world brings this risk into sharp focus for Australian companies.

A second underrated risk is climate change, given its potential impact on Australia’s burgeoning and strategic capacity for food production. Climate change risk exposes Australia to even greater geopolitical risk, placing the onus on companies to ways that address and mitigate its impact.

 

 

 

 

 

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