Businesses are not acknowledging the real risks in their operations and as a result are ill-prepared to deal with them, Aon Global Risk Consulting CEO Stephen Cross says.

Top of the list in Aon’s annual management survey is economic slowdown, followed by regulatory/legislative changes, he told an Aon conference in Melbourne last week.

This is followed by increasing competition and damage to the firm’s brand.

Mr Cross says damage to reputation is the top risk identified by Australian executives.

“However, there is one thing that will take an event and turn it into damaging a company’s reputation,” he said. “It is the advent of social media. That is what causes damage to reputations.

“There are 5 million people on Facebook and that is a completely new risk for business.

“It is not a one-in-10,000 year event.”

Among the lesser identified risks events perceived by business leaders is pandemic risk (36); share price volatility (41), unethical behaviour (42) and terrorism/sabotage (45).

Mr Cross questions how a company could put pandemic risk so near the bottom of the list.

“Think about SARS – it was a multi-billion dollar event,” he said. “But the surprising result was putting terrorism at 45. I don’t agree with that.”

Mr Cross says there are 375 acknowledged terrorist groups in the world and their targets include business, transportation, government and national infrastructure.

But he said there was one risk that every business faces and it is missing from the list – complacency.

“Today’s risks are not the same as those 10 years ago and business must look at the effects of putting together a number of these risks,” he said.

As a result Aon is now working with the Wharton School/University of Pennsylvania to produce a risk maturity rating for companies.

“Aon is in a far better position to discuss risk than the ratings agencies,” he said. “They have let us down when it comes to looking at risk.”

Aon is opening the online survey to a wider audience looking at organisational risks, and Australian companies will be included.