Cyber attacks emerge as a key risk concern for Asia Pacific business leaders

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Aon's 9th Global Risk Management Survey reveals a shift in priorities for APAC businesses, with 'cyber attack or data breach' claiming the top spot. The survey, polling over 2,800 decision-makers across 61 countries, also highlights growing concerns among business leaders around ‘attracting and retaining talent’ in the today’s market. Surprisingly, 'climate risks' and 'artificial intelligence' didn't make the top ten. The report emphasizes the urgency for businesses to address uninsurable risks and adopt comprehensive strategies to navigate evolving global challenges.

Aon has published the ninth edition of its Global Risk Management Survey, revealing the most pressing challenges according to business leaders worldwide. Now in its 17th year, the biennial survey polled more than 2,800 key decision makers (e.g. risk managers, finance, C-suite and HR leaders) across 61 countries to identify the top-ten risks facing organisations in the current climate.

After placing second in the 2021 survey, ‘cyber-attack or data breach’ jumped into first place as the top business risk both globally and in the Asia Pacific (APAC) region, with almost one-fifth of survey participants having suffered a loss due to a cyber-attack. Aon’s survey highlighted a growing awareness of cyber threats and the sharp uptick in ransomware attacks as key drivers behind respondents' concern around cyber-related risks, with impacts ranging from reputational and financial damage to critical operations being compromised.

According to Aon, ransomware attacks jumped 176 per cent in the first half of 2023. This is supported by a recent study published by blockchain analysis firm Chainalysis Inc., which indicated that ransomware gangs stole over $1 billion in 2023, the largest amount ever recorded.

The report said that in 2023, hackers nearly doubled the funds stolen in 2022 and exceeded previous records set during a ransomware boom during the pandemic. “Big game hunting” strategies are also becoming more prevalent, with hackers concentrating on scams that generate bigger payments within a single attack instead of the more high-volume, low-reward strategies.

In one extreme example, ransomware gang Cl0p racked up over $100 million in ransom payments by targeting the popular file transfer application MOVEIt, used by over thousands of organisations globally, including major corporations like Shell, British Airways, and federal government agencies in the United States.

Rounding out the top three risks are ‘business interruption’ and ‘economic slowdown or slow recovery’, which ranked as the second and third top risks for the second straight time. According to the survey, almost one-third of respondents experienced a business interruption loss during the last year, while fifty-five per cent had suffered a loss because of an economic slowdown or slow recovery.

One of the most notable findings was that human capital issues have become a key risk concern for businesses, driven by rising healthcare costs, competition for talent, and workforce shortages. In this year’s survey, ‘attracting and retaining top talent’ jumped five places on the APAC top-ten list, from number nine in 2021 to number four in 2023.

“In an uncertain business environment, with new skills gaps emerging and employee preferences shifting, companies are under pressure to reimagine total rewards well beyond salary”, the report stated. “Recruiting individuals with specific skills to accelerate companies’ transition plans can be challenging because many businesses are vying for a small talent pool”.

‘Rapidly changing market trends’ featured in the top ten for the first time at number five, with shifting geopolitical risk factors and fluctuating market risks (including a slowdown in raising capital, lower M&A activity, and organisations’ direct accountability for ESG DEI considerations) putting pressure on companies to keep pace.

Two surprising omissions from the top ten were ‘climate risks’ and ‘artificial intelligence’ despite these topics dominating recent headlines. Aon said in a news release that the results suggest a lack of awareness about the potential impact of these issues on the corporate risk profile, particularly concerning climate risks, which – according to Aon – caused $313 billion in global economic losses in 2022.

“What is more confounding are the risks that are noticeably unaccounted for in leaders’ assessments of the challenges they must address, notably climate risk,” said Andy Marcell, CEO of Risk Capital and CEO of Reinsurance Solutions at Aon. “Climate is not an emerging risk, but an urgent one, with increasingly monumental implications for businesses of all sizes. Leaders need insights from advanced analytics and modelling alongside innovative parametric solutions that will help them make better decisions today and protect them in the future.”

However, while climate change does not feature in the top ten, it does impact four of the top ten risks: business interruption (#2), changing market trends (#5), supply chain or distribution failure (#6) and regulatory or legislative changes (#7). For instance, the growing frequency and intensity of extreme weather events considerably increase the risk of business interruption and supply chain/distribution failure. At the same time, the rapidly evolving net zero transformation has countless implications for market trends and mandatory climate disclosure requirements for businesses.

The top 10 risks in the APAC region according to Aon’s 2023 Global Risk Management Survey are:

  1. Cyber Attack or Data Breach
  2. Business Interruption
  3. Economic Slowdown or Slow Recovery
  4. Failure to Attract or Retain Top Talent
  5. Rapidly Changing Market Trends
  6. Supply Chain or Distribution Failure
  7. Regulatory or Legislative Changes
  8. Increasing Competition
  9. Failure to Innovate or Meet Customer Needs
  10. Commodity Price Risk or Scarcity of Materials

Interestingly, only two of the top five current risks identified by business leaders in the APAC region are insurable – Cyber Attack and Business Interruption – and half of the overall top 10 are presently uninsurable.

Get the full results of Aon’s Global Risk Management Survey in the Pacific Region here.

Also read: How to play it cyber-safe with your liability insurance.

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