Competition, politics and lagging behind the times pose a growing challenge. Are they connected?
Political risk, failure to innovate and increased competition were the biggest movers in this year’s Australian risk management survey.
The three risks have increased markedly since the 2015 StrategicRISK survey of Australian corporate risk and insurance managers, and all appear in this year’s top 10 (see table below).
The risk of increased competition, which ranked fifth in 2015, topped the poll. Coming in second was economic conditions, last year’s premier risk; while failure to innovate shot from ninth place to third.
To view an interactive infographic of the survey results, including year-on-year comparisons of risks, click here.
XL Catlin Australia boss Robin Johnson said the three top risks, and targeted cyber attack in fourth place, were linked.
He said low interest rates had enabled businesses in almost all sectors to build out capacity.
“You’ve effectively seen supply increase in pretty much every industry. But demand has been much slower to increase. It’s stubbornly resistant to stimulus… You’ve got supply growing faster than demand and, as a result, competition is becoming more intense and technology is exacerbating this dynamic.”
Innovators and disrupters are adding to the competitive dynamic. “People talk about Uber and Airbnb, but they’re just the poster childs for innovation. I think in most industries the disruption that we’re seeing has been much longer coming,” Johnson said. “I think it’s an irrefutable fact that as companies become more reliant on technology, then technology risks become more important.”
RIMS Australasia board member and risk manager Cathy Murray agreed that some of the top 10 were closely linked.
“The number-one risk of increased competition is quite interesting, particularly because some of the other top risks identified can influence the level of market competition,” she said.
“Failure to innovate should also be high [on any risk register] because if you’re not changing and looking at what your competitors are doing, communicating with your customers and looking at what you can do better, you’re not going to be a sustainable business.”
BPAY group risk manager Francesca Dickson said the results were likely due to the pace of change and the speed of innovation facing companies: “A lot of these developments, particularly in the digital and IT space, have been happening for quite a few years but I think there’s been a lot more awareness in the last year or two.”
She said ‘increased competition’ topping the list could be down to a shift in risk managers’ roles: “As risk management in general moves from more operational risks to strategic risks, we are starting to look more at competition.”
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