The aim of this executive summary, based on findings and analysis from the Economist Intelligence Unit and commissioned by Lloyd’s, is to assess corporate risk priorities and attitudes around the world. The findings are based on a global survey of over 500 C-suite and Board level executives conducted in August 2011.
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.
In this summary we examine some of the over-arching trends and themes emerging from the 2011 survey. We also identify major shifts from the 2009 survey and report, “Lloyd’s 360 Risk Insight: Risk Priorities and Preparedness”. We would like to thank the respondents who took the time to participate in the survey.
The Economist Intelligence Unit bears sole responsibility for the content of this executive summary. The EIU editorial team executed the online survey, conducted the analysis and wrote this summary.
The survey examined attitudes to risk across five key categories:
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Business and strategic risk
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Economic, regulatory and market risk
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Political, crime and security risk
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Environmental and health risk
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Natural hazard risk
Respondents to the survey were asked to rate both the overall risk category and a series of key risks within each category against their corporate risk priorities and degree of preparedness to manage those risks. A score was calculated for each where zero represents the lowest level of priority or preparedness and ten represents the highest.
Some new risks have been added to the 2011 survey from the 2009 version. These enable us to explore in greater detail the role of government, demographic forces, and global resource issues such as food security and water scarcity, all of which we believe will give a more complete picture of corporate risk priorities in 2011.
In the next two tabs, we identify the key risk areas by looking thematically at the overall risk ratings, the top risks and the biggest changes from 2009. We also examine the survey results through a regional lens for the biggest differences in relation to current economic, political and commercial operating contexts.
Three years on from the start of the worst financial crisis for more than a generation, there is still uncertainty about the future. Will we manage to avoid a double-dip recession and emerge into a period of growth? If we do, will it be strong growth, or a prolonged period of slow progress, as many economies are currently experiencing?
How can business manage risk in this environment? The financial crisis has undoubtedly reduced global economic resilience and, as the World Bank argues in its 2011 report on the macroeconomic risk landscape, the interconnectedness of global shocks through increasingly interlinked and interdependent systems has raised the threat level of risks across the board.
Economies in many developed countries are weighed down with debt and face years of sluggish growth, and may lack the agility required to efficiently manage external factors in this context. Meanwhile, Asia’s 3.5 billion consumers and dynamic market environment may provide a massive growth opportunity.
A number of interesting insights and consistent themes can be seen emerging from the survey. There is a greater sense of preparedness to address risk across the world’s boardrooms, a significant global disparity across the entire risk arena between east and west and a heightened sense of priority across all risk categories.
Anything high on an executive's risk priority list can be considered in terms of a potential critical point of failure for business; some significant changes in the risk landscape over the past two reflect new critical points of failure, such as risk of talent shortage.
Yet, as this summary shows, attitudes to risk reflect neither anticipation for a new era of growth nor anticipation of the feared double-dip recession. Uncertainty is still the issue of the day.
The survey conducted in 2009 offered respondents a list of 41 risks. The 2011 Lloyd’s Risk Index updated this list to reflect the current risk environment by removing some of these risks and adding others. A full list of these removals and additions can be found at Annex 2.
This means that the 2009 and 2011 rankings are not statistically directly comparable, although they do offer a pertinent insight into changes in both perceptions of risk priority and preparedness over the last two years.
