Long-term view of risk defines successful leaders

Leaders that grapple with risk are better prepared to navigate through and succeed during highly volatile times and economic uncertainty.

This is among the findings of Aon’s 2022 Executive Risk Survey, Making Better Decisions in Uncertain Times, which found that while 79% of business leaders expect a recession this year, a select group of leaders – just 35% – report feeling very prepared for it.

Greg Case, CEO of Aon, said: “Strong, prepared leaders are essential to protecting an organisation’s resilience and finding growth opportunities in the face of heightened volatility. This year’s report reveals that leaders who are very prepared to weather economic challenges embrace calculated risk-taking as an engine of growth.

“Climate risk is not a probability, it is a certainty and severe weather is becoming more and more a part of everyday life. What this research shows us is that while climate change is one of our greatest challenges, it could also be one of our greatest opportunities. It is the ultimate example of the interconnectivity of risk. More companies are looking at the challenges caused by climate change beyond regulatory compliance and reputation management and are digging into the related risks where the impact is immediate and measurable – business interruption, material scarcity, supply chain issues and reputation damage. And we are seeing that the leaders who are investing more time and resources to the challenge are better prepared as a result.”

Aon’s survey was conducted in September 2022 amongst 815 C level respondents across C-suite, partner, senior executive and executive respondents at companies with 500+ employees across a range of industries in the US, Canada, the UK, Germany, France, Italy and Spain.


Further findings (Source: Aon)

Business leaders who are very prepared for a recession share four fundamental attitudes towards preparedness, according to Aon’s study.

• Embracing risk is the only option. Sixty-two per cent of very prepared leaders agree that their company’s appetite to address risk has increased in response to the current macroeconomic conditions. For companies that feel very prepared heading into a recession, addressing risk isn’t a choice, rather it’s a question of survival.

• Analysis and advice from internal and external stakeholders is vital in making better decisions. Very prepared leaders are nearly twice as likely to say they value the counsel of an external advisor to improve their company’s ability to make good decisions and deal with risk. Confident leaders are also resisting the urge to slow hiring despite challenging economic conditions. In fact, 42% of very prepared leaders are spending a great deal of time on the issue of attracting and retaining top executive talent, compared to just 22% of other leaders.

• Covid-19 has demonstrated the interconnectivity of risks. Sixty-one per cent of very prepared leaders agree that risks are interconnected, drawing on their experiences during the pandemic. A strong majority (73%) of the best-prepared leaders strongly believe that the pandemic prepared them to respond quickly to emerging risks, giving them added confidence as they head into a recession.

• Don’t hit the brakes on long-term investment — or ignore long-tail risks. The top five risks that all business leaders report they are most focused on are: inflation, a financial crisis, energy supply, cyber attacks and supply chain disruptions. In addition to addressing these risks, very prepared leaders are also looking ahead and spending more relative time than other leaders on longer-term challenges like economic/social inequality, disruptive technologies, crypto and blockchain. Similarly, about half of very prepared leaders are spending a great deal of time on climate change, compared to just 26% of other leaders.

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