Trends show that risks faced by Australian businesses are rapidly changing and there are new ones to worry about every year. Therefore, the best course of action would be to annually keep aware of and prepare for the biggest risks faced by Australian businesses. To give you some perspective, cyber incidents, which was ranked as the 15th biggest risk for businesses just seven years ago, is now the number one business risk!
The Allianz Global Risk Barometer 2020, which surveyed more than 2,700 risk management experts across 22 industries in 102 countries, including Australia, has been recently released, identifying the top ranked business risks anticipated for the next year and beyond around the world and in individual countries.
In Australia, changes in legislation and regulation was the top ranked business risk with cyber incidents ranked second.
Environmental concerns, especially in light of the recent bushfires and extensive drought conditions, heavily influenced the top ranked business risks in the country. Climate change was ranked as the third highest business risk (tied with market developments) with natural catastrophes and environmental risks making it to the top ten as 'NEW' risks faced.
Globally, as awareness of cyber attacks has grown, cyber incidents was ranked as the number one business risk, taking the place of business interruption, which held top rank for seven consecutive years, further demonstrating trends are rapidly changing and businesses need to be prepared.
Let's take a look at the top 3 biggest risks facing Australian businesses in 2020 and beyond.
#1. Changes in Legislation and Regulation
Concern with changes in legislation and regulation is no surprise given trade disputes this past year, new trade barriers and evolving sustainability regulations. As policies change, companies have to keep up not only to avoid severe financial and legal consequences, but to stay competitive. Especially as sustainability is becoming a key priority, companies are focusing on creating clear Environmental, Social and Governance (ESG)-profiles, enabling them to advance their sustainability credentials, be more appealing to business partners and investors and enhance their brand reputation. In order to stay ahead of the curve of these inevitable changes and maintain compliance, businesses should focus on making sure they are meeting regulatory obligations and integrating environmental efforts with business activities. As this can be a daunting undertaking, software like RiskWare's Compliance Management Module and Environmental Module is worth investing in to help you organise and track your efforts.
#2: Cyber Incidents
With companies increasing reliance on data and IT paired with the increasing sophistication of cyber attacks, it is no surprise cyber incidents have been deemed such a top concern for businesses in Australia and around the world. Not only do companies count on technology for their business operations, but also to store significant volumes of customer data, opening them up to greater vulnerabilities and losses. The most common types of cyber incidents in Australia and New Zealand currently are ransomware, phishing and malware (2017/2018 BDO and Auscert Cyber Security Survey), so companies should first work to protect themselves against these threats. Luckily there are numerous ways to protect your business, including investing in security software, backing up and encrypting your data and implementing ongoing education and training for employees. It's also critical to have a business continuity plan in place for your IT to give your business the best chance of surviving any sort of cyber incident.
#3. Climate Change & Market Developments
In response to climate change and increasing volatility of weather being ranked a top third concern for Australian business, James Stack, CEO of AGCS Australia said:
“The unprecedented number of major bushfires across multiple Australian states has dominated headlines. Fueled by rising temperatures and extreme dry weather attributed in part to climate change, these fires not only cause physical property damage, but also potential business interruption as the smoke causes hazardous air quality levels. With increased awareness, and first-hand experience of the negative impact, it is no surprise to see climate change in the top three Australian risks for the first time."
As many companies in the country have witnessed and experienced first-hand the effects of climate change on business operations, productivity and customers, there has never been more of a need for organisations to monitor and investigate their environmental impact and implement policies and procedures that contribute to minimising liabilities, maximising use of resources and reducing waste. This can be done through sound environmental management. Additionally, as weather can be unpredictable, it's important for businesses to prioritise business continuity management so they are prepared should disaster strike.
Market developments refer to volatility, intensified competition and new entrants, mergers and acquisitions, market stagnation, market fluctuation, among other issues. These present grave threats to business operations and carry a high degree of uncertainty. To protect your organisation requires effective enterprise risk management, meaning you have a framework and process in place to identify, analyse, evaluate and prioritise the greatest risks to your business and implement treatment plans to either mitigate or avoid the risks completely. Software like RiskWare's Risk Management Module can help organise your process and monitor your progress.
These rankings give great insights into what issues businesses should be most aware of and focus on having preparing to protect their business and people so you can be better prepared today for the unforeseen things to happen tomorrow!
To learn more about how RiskWare is making the world a little less risky, visit us at RiskWare.com.au.