The emergence of the COVID-19 pandemic demonstrates how important it is for businesses to rethink risk management strategies, according to a study conducted by Aon, which found that the vast majority of risk registers had not featured health crises amongst their top ten risks prior to the COVID crisis.

This was the case for 82% of respondents. This time last year, pandemic risk was ranked 60 out of 69 identified risks. Enterprise risk management strategies and management teams were therefore unable to rapidly respond to the threat of the pandemic and, when it hit, their risk infrastructure struggled to cope with the initial response.

Chief executive officer, of Aon’s global risk consulting division, Rory Moloney, Aon, is in no doubt that the pandemic will permanently change the way companies operate. “There is a long way to go before we are in the ‘post-COVID era’, but as we move towards a recovery phase, companies must now ask what risk management and resilience should look like going forward,” he said. “Among the top priorities for companies seeking to reshape their business are the new and accelerated use of technology, redeploying resources, workforce planning and rethinking the future of work -- this is only the beginning of a much more long-term evolution in risk management.”

Aon’s report identified differences in how businesses have responded regionally; prior to COVID-19, less than 30% of respondents in EMEA had a pandemic plan in place, similar to North America at 31%, but contrasting to 52% of respondents in APAC. Organisations there had built more robust pandemic programs in response to similar threats already faced, such as SARS and the swine flu. The survey found that across all industries and regions, protecting people and assets was a top priority for participants.

Fluctuating pandemic infection rates within regions are influencing which stage businesses find themselves in (‘react and respond’, ‘recovery’ and ‘reshape’). For example, North America has the highest proportion of organisations in the ‘recovery’ phase (59%), while APAC organisations reported they were in the ‘reshape’ phase in higher numbers than the benchmark (36% of APAC organisations compared with 29% overall), likely because of their experience in the progression of the pandemic. Despite these differences, one core theme emerged: more than half of companies report that they expect COVID-19 will continue to impact their business a year from now.

Richard Waterer, managing director for global risk consulting in EMEA, said he believes the government’s response to have been a necessary stopgap for a global event of this size, but that a greater effort is now required in risk transfer to support corporate mitigation efforts. “Part of that journey will require companies to rethink access to capital alongside risk, in addition to ongoing collaboration between the public and private sector. Equally important is that the insurance industry innovates in response to companies’ changing needs, increasing global volatility and emerging risks,” he said. “Successful insurance solutions in the wake of the pandemic will be more agile, strategic, targeted and scalable.”

Aon’s survey addressed both qualitative and quantitative risk issues. Risk managers, CROs, CFOs, treasurers and others provided feedback and insight on their insurance and risk management choices, interests and concerns.

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