Brand reputation, regulation and innovation are the biggest risks to Australian businesses in 2017

Brand reputation, regulation and innovation are the biggest risks to Australian businesses in 2017

Sydney, 18 May 2017 – Australian businesses are more optimistic about the economic landscape than the rest of the world, but increased competition and consumer pressure to innovate pose the biggest threats to business growth, according to a new survey by Aon.

The latest edition of Aon’s biennial survey reveals that economics, demographics and geopolitics as well as technology advancements are creating a new reality for companies around the world.

Damage to brand and reputation remained one of the top ranked risks by businesses at home and abroad.

Lambros Lambrou, Chief Executive Officer of Aon Risk Solutions Australia said “We have seen many recent cases in the media where scandals, poor customer experience or product recalls has impacted a company’s share price and performance in the short-term – and in some cases caused longer-term financial difficulties. The increasing influence of social media and activist sites mean that risk and reputational issues can escalate very quickly.”

“Organisations need to understand how perceptions of their brands are changing, and be ready to respond at short notice to unpredictable and often unavoidable crises. When handled well, a crisis can actually be a chance to improve brand perception,” Mr. Lambrou added.

Regulatory and legislative changes: The number one risk

The survey reports that the number one risk for Australian businesses in 2017 is regulatory and legislative changes. Globally, businesses ranked this at number four, illustrating that this is a much more acute risk for Australian businesses than for their global counterparts.

Commenting on the need for companies to consistently assess their political, security and regulatory risk, Mr. Lambrou added that “Regulations can create advantages for consumers as the government attempts to create a level playing field across an industry, however, they can often be quite costly for companies to comply with – and even more so if they are breached. Periods of shifting regulation due to political motives between different administrations can make it difficult to define a long-term business strategy.”

Fierce competition increasingly becoming a challenge

Competition moved up to the number three risk concern for Australian businesses this year. The ranking of competition, innovation and technological infrastructure all in the top 10 signals a trend in corporate concerns about future proofing business against risks.

According to the survey, nearly a third of respondents claim that failure to innovate to meet customer needs has resulted in a direct loss to income over the last 12 months. Disruptive technologies is an emerging risk that ranked at number 20 globally this year but respondents believe it will be a top 10 risk by 2020.

Mr. Lambrou stated that “Once an organisation has deployed robust technology defences, educated staff about the risks of cyber-attack, and promoted policies about how to respond and move towards digital transformation - it has laid important foundations for its protection and growth in an increasingly competitive market.”

Investments in infrastructure: A challenge and an opportunity 

Major project failure was a new entry to Aon's list of top risks in 2017.

Development of national infrastructure has been a centrepiece of the 2017-18 Budget, with the Government committing $75 billion in critical infrastructure funding and financing over the next 10 years. However, in trying to compete with overseas competition, aggressive infrastructure planning has resulted in crippling delays.

Mr. Lambrou said “We are increasingly seeing reports in the media of how high profile social infrastructure and energy projects have had to absorb billions of dollars in losses due to major project failure. Businesses in Australia need to fully integrate risk management strategies to deliver high quality, cost effective projects if they want to compete in a global market.”

Note to editors

About the 2017 Aon Global Risk Management Survey

Aon’s 2017 Global Risk Management Survey is designed to offer organisations insights to compete in an increasingly complex business environment. Conducted biennially, the survey gathered input from 1,843 respondents at public and private companies from around the world in 10 languages. The 2017 findings from the survey, which was conducted in the fourth quarter of 2016, underscored that companies are grappling with new risks and that there are differences of opinion on how to best prioritise and respond to them.

Top 10 Australian risks are:

  1. Regulatory / legislative changes
  2. Damage to brand & reputation
  3. Increasing competition
  4. Failure to innovate/meet customer needs
  5. Cyber crime / hacking / viruses / malicious codes
  6. Major project failure
  7. Failure to attract or retain top talent
  8. Economic slowdown / slow recovery
  9. Business interruption
  10. Lack of technology infrastructure

Top 10 global risks are:

  1. Damage to brand & reputation
  2. Economic slowdown / slow recovery
  3. Increasing competition
  4. Regulatory / legislative changes
  5. Cyber crime / hacking / viruses / malicious codes
  6. Failure to innovate / meet customer needs
  7. Failure to attract or retain top talent
  8. Business interruption
  9. Political risk / uncertainties
  10. Third party liability

Download the 2017 Global Risk Management Survey – Australian Highlights
Access the full 2017 Aon Global Risk Management Survey

About Aon
Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.


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