Human capital issues rise to the forefront of business risks
Human capital issues have emerged as a significant business risk, climbing from outside the top 10 in 2021 to the fourth spot in Aon’s 2023 Global Risk Management Survey. This shift reflects a growing recognition among risk managers that issues such as rising healthcare costs, talent competition, pose substantial threats to overall business performance.
Despite this heightened awareness, only 11% of survey respondents indicated they had quantified their people risks, highlighting a disconnection between risk awareness and risk preparedness.
Lambros Lambrou, CEO of Human Capital at Aon, emphasised the critical need for organisations to address human capital challenges proactively, and explained, “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.”
The survey also revealed an omission of climate and AI among the top 10 global risks. Climate risk, despite its urgency and potential impact on organisations, was ranked 17th, while AI was relegated to 49th.
Andy Marcell, CEO of Risk Capital and CEO of Reinsurance Solutions at Aon, added, “Climate is not an emerging risk, but an urgent one, with increasingly monumental implications for organisations of all sizes. What leaders need now are insights from advanced analytics and modelling alongside parametric solutions that will help them make better decisions today and protect them in the future.”
Similarly, AI, with its potential to amplify existing risks and introduce new ones, demands greater attention from risk managers. Understanding the liabilities and insurance implications of AI across the digital value chain is crucial for organisations to navigate the complex risk landscape of technological advancements.