Weather Enters Top Ten Risks to Agribusinesses, Aon Global Risk Survey Reveals
Increasing weather volatility is heightening the risk faced by Irish businesses across the board, the newly release Aon Global Risk Management Survey reveals. For the first time since the survey began in 2009, weather has emerged in the top ten risks to the agribusiness sector. A total of 88% of businesses’ profits and losses are directly impacted by weather, with agriculture, retail, and construction sectors facing the highest risk. Risk management company Aon discussed the findings of the global survey at the first Irish event since its launch on June 15th at the Science Gallery in Trinity College Dublin. The bi-annual survey is undertaken by over 1800 risk managers from many of the largest firms worldwide and tracks changes in both real and perceived risk areas. One of the biggest concerns arising from the survey was the gap in expectations between awareness of risk and senior management’s ability to control exposures.
Pic Shows: Aon’s risk management event is Bill O’Sullivan from Boyne Valley Group and Ciara Jackson, Director of Agri-Food & Beverage Practice at Aon. The event marked the launch of Aon’s 2017 Global Risk Management Survey, which tracks changing concerns for CEOs across the globe.
Commodity price risk and weather disasters are revealed as the two biggest risks to the agribusiness sector, while reputational damage is the key concern of hotel and hospitality owners and banking, beverage and consumer goods leaders. Cybercrime and political risks are rising quickly to priority concerns among all sectors, with cybercrime now standing as the fifth biggest concern for CEOs across the globe and political risks entering the top 10 for the first time. The threat of cybercrime touches on all businesses now and is a rising concern among agribusinesses due to the risk of business interruption, which is the sector’s fourth biggest fear. In a worrying trend, the readiness of companies to deal with risk has decreased over the last two years, falling from 39% in 2015 to the current 27%. “We are living in a challenging new reality for companies of all sizes across the world. There are many emerging influences that are creating opportunity, but at the same time, creating risks that need to be managed,” said Rory Moloney, CEO for Aon Global Risk Consulting, “As the risk landscape for commerce evolves, businesses can no longer rely solely on traditional risk mitigation or risk transfer tactics. They must take a cross-functional approach to risk management and explore different ways to cope with these new complexities. The food and beverage sector is particularly affected by more extreme weather conditions and price volatility and we have a specific service for that market.”
Pic Shows: Ciara Jackson, Director of Agri-Food & Beverage Practice at Aon, and Gerald Fleming, Head of Forecast Division for Met Éireann.
Kurt Cripps, Managing Director of Aon Global Head of Weather Risk, commented on the findings, “For 88% of businesses’ profits and losses to be directly impacted by weather is a significant finding for Irish business. In a country where the agriculture and hospitality industries are so important to the economy, we have always known that there is some weather risk for certain sectors. To see it on such a large scale puts into context how hidden risks and volatile, uncontrollable factors can threaten profits. It is imperative for all companies to assess their risks and figure out how best to manage them.” The top ten risks for today’s food, agribusiness and beverage firms are: Commodity price risk Damage to reputation/brand Regulatory/legislative changes Business interruption Increasing competition Product recall Exchange rate fluctuation Distribution or supply chain failure Economic slowdown/slow recovery Weather/natural disasters Aon has a specialised Food and Beverage Practice Group that provides risk management support to businesses in the sector.