Greatest fears for global business: customers, staff, certainty
Tue 06 Dec 2011
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Business leaders across the world are most worried about losing customers and finding talented workers as they fight to survive in uncertain economic conditions, according to the 2011 Lloyd’s Risk Index released today.
Fears about a fall in orders as a result of global austerity and a shortage of skilled workers, despite high levels of unemployment, have displaced lack of available credit – the greatest concern for businesses in 2009 – at the top of the Index.
The Lloyd’s Risk Index – based on a survey by the Economist Intelligence Unit (EIU) of 500 business leaders – provides a comprehensive picture of organisations’ perceptions and preparedness to manage their changing corporate risk priorities, and tracks how these have changed since 2009.
It reveals:
- Businesses say a loss of customers and cancelled orders is their number one global risk. This contrasts with 2009’s top risk – cost and availability of credit.
- Prioritisation of business and economic risk has increased by 8% as business leaders contend with slowing growth and the looming prospect of a global double-dip recession.
- Fears of a new ‘talent crunch’ are also growing more acute. Despite increasing unemployment in many regions, skills shortages were ranked 2nd highest of all risk priorities.
Lloyd’s Chief Executive Richard Ward said:
“Two years ago, businesses told us they were primarily concerned about the cost and supply of credit. Now their worries are even more fundamental with many wondering just what’s happened to their customers, and where can they find the skilled staff they so desperately need. The survey is a snapshot of two years of economic uncertainty.”
The index highlights some notable changes since 2009 across the 50 corporate risks facing organisations:
| 2009 top five risks |
2011 top five risks |
| Cost and availability of credit |
Loss of customers / cancelled orders |
| Currency fluctuation |
Talent and skills shortages |
| Insolvency risk |
Reputational risk |
| Loss of customers |
Currency fluctuation |
| Major asset price volatility |
Changing legislation |
Business leaders placed ‘natural hazard’ risks – ranging from flooding to earthquakes – in the bottom ten of 50 risks. This is despite a series of devastating natural catastrophes across the world in 2011, which is already the second most expensive year on record1 for the insurance industry.
Yet despite the $205bn gap2 that exists between the insured risk and the real economic cost of such catastrophes in the first half of 2011 alone, the majority (70%) of business leaders feel better prepared to cope with most of the risks they face compared with two years ago.
Richard Ward added:
“On the one hand, it’s reassuring to see growing awareness and understanding of the fast moving, unpredictable risks facing global businesses. But business leaders must plan for and take action to address not only likely scenarios, but those rare and hard to predict events that form part of this complex, modern risk landscape.”
To find more detail on the top risks facing business today, please visit www.lloyds.com/riskindex.
For further information, please contact:
Sarah Robson
Tel: +44 (0)20 7327 6125 Fax: +44 (0)20 7327 5229 Email: sarah.robson@lloyds.com
Tom Foxton
Tel: +44 (0)20 7327 5514 Fax: +44 (0)20 7327 5229 Email: tom.foxton@lloyds.com
About Lloyd’s
Lloyd's is the world's specialist insurance market and occupies fifth place in terms of global reinsurance premium income, and is the largest surplus lines insurer in the US. In 2011, 87 syndicates are underwriting insurance at Lloyd's, covering all classes of business from more than 200 countries and territories worldwide. Lloyd's is regulated by the Financial Services Authority.
About the Survey
The Lloyd’s Risk Index 2011 was carried out by the Economist Intelligence Unit in August 2011. The survey measured attitudes about risk across five categories:
- Business and strategic risk,
- Economic, regulatory and market risk,
- Political, crime and security risk,
- Environmental and health risk, and
- Natural hazard risk.
Survey respondents were distributed across Europe (35%), North America (27%) and Asia-Pacific (27%), with the rest of the world comprising about 10%. Financial services provided the largest number of respondents at 19%, followed by professional services at 13%, manufacturing at 10% and technology at 10%. The remaining 48% of respondents represent a wide range of other industries.
Around one-half of respondents represent corporations with annual revenues of over US$500m.
1 Taken from Insurance Information Institute report Global Economic Turmoil, Catastrophic Loss and Insurance: Implications for Risk Management & Marine Insurance Markets, September 19, 2011
2 ibid
