Cyber breaches remain an underrated threat among councils, according to Aon’s Australian Local Government Risk Report. 
 

The risk is not one of respondents’ top 10 concerns, despite its potential for serious business interruption and financial loss.

Cyber risk also has ramifications for directors and officers, particularly in relation to breaches of privacy laws, Aon says.

Financial sustainability and stability, the No.1 concern last year, remains top this year among Australian local government respondents. Reputation has emerged as a new risk, reflecting community concerns about the performance and behaviour of councils.

Aon National Head of Local Government Paul Crapper says the low rating for cyber is “alarming”.

“Councils, regardless of physical location and size, are increasingly under threat of cyber attack.”

An ongoing risk management concern is the relatively high level of “attritional loss” claims, particularly relating to trip and fall injuries.

“A focus on reducing claims of this nature will help alleviate premium pressures and result in more attractive assets to insurers,” Mr Crapper said.

“Effective risk management is a balance between meeting ratepayer demands for increased services with the impacts of cost shifting, rate capping and amalgamations.”

The report also reveals a change in the distribution of insurance placement. Mutual schemes continue to dominate the local government protection market, but 9% of councils surveyed have moved to commercial carriers. That figure is expected to grow as high as 25% next year.

Top 10 risk concerns for Australian local government are:

1. Financial sustainability and stability
2. Infrastructure
3. Weather
4. Population change
5. Asset protection
6. Human resources
7. Funding
8. Environmental
9. Merger
10. Reputation.

The survey questioned more than 100 local government risk management executives.