Human capital issues are no longer simply a ‘people problem’, but a key business risk that is fuelled by rising health care costs, the competition for talent, workforce shortages, and a lack of retirement preparedness, according to the latest edition of Aon’s biennial global risk management report.

The survey, which gathered input from almost 3,000 risk managers, C-suite leaders and other executives from 61 countries and territories, this year saw ‘attracting and retaining top talent’ ranked fourth globally, after not breaking the top 10 in 2021. However, only 11% of respondents said they have quantified their people risks, illustrating a significant gap between risk awareness and risk preparedness.

Lambros Lambrou, CEO of human capital at Aon, said: “We are at a pivotal moment in time, when business leaders are recognising the true cost of human capital challenges and the reality that people risk intensifies all other top business risks. Shortfalls in talent, workforce or critical specialised skills can hamper innovation and competitiveness and increase exposure to cyberattacks, regulatory breaches, supply chain issues, business interruption and reputational damage.”

Despite warnings and headlines, climate and AI are notably missing from the global top 10 ranking, suggesting a lack of awareness about the potential impact of these issues on the corporate risk profile. More immediate climate driven risks include property damage, impact of severe weather, natural catastrophes, and the consequences for business of climate-related regulatory changes and compliance obligations.

As conflicts, geopolitical change, and macroeconomic conditions continue to have broad-reaching impacts, business leaders also ranked the risk of supply chain and distribution failure at its highest level in 14 years, at number six in the list of concerns. According to the latest survey, less than 40% of organisations have conducted supplier resiliency assessments and less than 20% have diversified their supplier base to mitigate supply chain or distribution failure risk.

Cyber attacks and data breaches remain the top risk in this year's survey, both globally and in North America, and they have also climbed to the top spot in Europe and Asia Pacific. Cyber shows the highest level of risk readiness, and it has one of the lowest reported losses of income and one of the highest percentages of risk mitigation actions across all top ten risks. Business interruption remains the number two risk since Aon's 2021 survey, reflecting the reality that business interruption events are increasing and can affect multiple industries and companies simultaneously.

The top ten global risks according to Aon’s 2023 global risk management survey are:

• Cyber attacks/data breach;
• Business interruption;
• Economic slowdown/slow recovery;
• Failure to attract or retain top talent;
• Regulatory/legislative changes;
• Supply chain or distribution failure;
• Commodity price risk/scarcity of materials;
• Damage to reputation/brand;
• Failure to innovate/meet customer needs;
• Increasing competition.

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