Aon survey shows risk mounting for local businesses
Aon’s 2008/09 Australasian Risk Management benchmarking survey has confirmed risk is a top concern among businesses looking to survive the financial downturn.
The survey of more than 400 Australian and New Zealand organisations found concern about business risk factors including liquidity, counterparty risk and credit has increased significantly.
And survey respondents once again named QBE as the top insurer, followed by Lloyd’s and Vero. In the previous survey the top three insurers were QBE, Ace and AIG.
Among the top 20 risk issues for firms, concern about liquidity has leaped six places to seventh while credit concerns lifted four places to 19th.
The top four risk concerns are unchanged from the previous survey, with brand and image, corporate governance, systems and human resources the top priorities.
Aon says insurance premium rates will increase across the board by 7-10% this year due to significant increases in risk retention costs among certain industries such as the mining sector, with large-scale natural catastrophes also a significant factor.
“It is expected that the five-year trend of falling total cost of insurable risk will reverse next year, driven by both increases in premiums and falling revenues for many organisations,” Aon said.
In the latest survey, the median total cost of insurable risk continued to fall at $4.52 per $1000 of revenue, a 26% fall from 2007/08 results and well down on the $11.97 peak reported in 2003/04.
A soft insurance market and high revenues in the 2007/08 financial year were behind the relatively low cost, it said.
Aon Australia CEO Steve Nevett says many firms needed to improve their “culture of risk management”.
“Many risks were identified leading into the current financial crisis, but not adequately assessed or addressed due to the attractiveness of making short-term profits,” he said.
The survey of more than 400 Australian and New Zealand organisations found concern about business risk factors including liquidity, counterparty risk and credit has increased significantly.
And survey respondents once again named QBE as the top insurer, followed by Lloyd’s and Vero. In the previous survey the top three insurers were QBE, Ace and AIG.
Among the top 20 risk issues for firms, concern about liquidity has leaped six places to seventh while credit concerns lifted four places to 19th.
The top four risk concerns are unchanged from the previous survey, with brand and image, corporate governance, systems and human resources the top priorities.
Aon says insurance premium rates will increase across the board by 7-10% this year due to significant increases in risk retention costs among certain industries such as the mining sector, with large-scale natural catastrophes also a significant factor.
“It is expected that the five-year trend of falling total cost of insurable risk will reverse next year, driven by both increases in premiums and falling revenues for many organisations,” Aon said.
In the latest survey, the median total cost of insurable risk continued to fall at $4.52 per $1000 of revenue, a 26% fall from 2007/08 results and well down on the $11.97 peak reported in 2003/04.
A soft insurance market and high revenues in the 2007/08 financial year were behind the relatively low cost, it said.
Aon Australia CEO Steve Nevett says many firms needed to improve their “culture of risk management”.
“Many risks were identified leading into the current financial crisis, but not adequately assessed or addressed due to the attractiveness of making short-term profits,” he said.