As technology continues to advance at an unprecedented rate, the accompanying growth also brings forth significant risks. Amidst the rapid development, there are major threats that warrant attention. According to a comprehensive study conducted by Aon plc, the Asia Pacific region faces a critical challenge in the form of cyber-attacks and data breaches, emerging as the top business risks.
The growing importance of vigilance and the implementation of robust cybersecurity measures is underscored as organisations navigate the dynamic landscape of technological progress. Aligning with this concern, Aon plc recently revealed the outcomes of its 2023 Global Risk Management Survey. This survey compiled insights from almost 3,000 risk managers, c-suite leaders, and other executives spanning 61 countries and territories.
“The world is more volatile, reflecting a series of profound transitions across trade, technology, weather and workforce issues that have awoken business leaders to the increasingly interconnected nature of risk and people challenges. Through the use of advanced analytics and more integrated Risk Capital and Human Capital capabilities, we’re helping clients quantify, manage and match capital to the risks they recognise today as we innovate on their behalf to serve their future needs,” said Aon CEO, Greg Case.
Aon's biennial survey for 2023 highlighted the primary business risks in the Asia Pacific region, with cyber-attack, data breaches, economic slowdown, slow recovery, and business interruption took the top spots. Notably, cyber-attack and data breaches have risen to become the foremost risk, a shift from their second-place ranking in the 2021 survey.
This reflects the widespread concern about cyber risks globally, evident in their consistent upward trajectory in the top 10 rankings over recent years. The region has witnessed an increase in data protection scrutiny and regulatory enforcement following high-profile data breaches and ransomware attacks, contributing to a more challenging cyber risk landscape.
Economic slowdown or slow recovery holds the second position as a significant risk in the Asia Pacific region. The area faces economic challenges, with organisations and governments feeling the impact of tighter monetary policies, increased capital costs, and the expectation of prolonged higher interest rates.
Despite these challenges, the Asia Pacific region is anticipated to remain the most active in terms of GDP growth in 2023, with a projected growth rate ranging from 0.7 per cent to 4.6 per cent. China and India are expected to play pivotal roles, contributing half of global GDP growth in 2023 and 2024.
Anne Corona, CEO of Asia Pacific for Aon, emphasised the need for a shift in mindset to better prepare for risks in the face of these challenges. The top ten business risks in the Asia Pacific, according to the 2023 survey, include cyber-attacks, data breaches, economic slowdowns, slow recovery, business interruption, failure to attract, retain top talent, rapidly changing market trends, supply chain, distribution failure, regulatory, legislative changes, increasing competition, failure to innovate, meet customer needs, commodity price risk, and scarcity of materials.
Notably, only two of these top five risks are currently insurable, and half of the overall top 10 are uninsurable at present. While climate change doesn't directly feature in the top 10 risks, it has a significant impact on four of them: business interruption, changing market trends, supply chain, distribution failure, regulatory, legislative changes.
The region's increasing frequency of extreme weather events heightens the risks of business interruption and supply chain failures, while the ongoing shift towards net-zero transformation has implications for market trends and mandatory climate disclosure.