Terrorism an ‘underrated threat across the region’: Aon

Talking exclusively to StrategicRISK following the launch of Aon’s Underrated Threats? report, Aon Risk Solutions’ head of crisis management and trade credit in Asia Julian Taylor (pictured) said that China, South Korea and Japan had invested heavily in emerging markets as diverse as Africa and Latin America.

As a result, he said, they needed to understand the risks if they were to avoid serious problems with their investments.

Hong Kong-based Taylor said that while we were unlikely to see immediate effects of the US Terrorism Risk Insurance Act in Asia, terrorism remained an underrated threat across the region.

“Despite the recent regulation and movement in the US markets, the terrorism and political violence insurance market is Asia has continued to soften with increased market capacity coming from new ventures combined with no major catastrophic losses in 2013,” he said.

“The two notable new ventures in 2013 were XL Insurance with $100 million of capacity and ANV Syndicate at Lloyd’s with $50 million of capacity.

“In the absence of any major losses, the trend for 2014 seems to be a continued softening of the Asia market with additional capacity coming from Lloyd’s and the company market in equal measure.”

Risks ‘growing in complexity’

The 2014 Underrated Threats report is a sequel to Aon’s 2013 Global Risk Management Survey. It analyses the responses from more than 100 organisations representing a broad range of countries, revenue sizes and business sectors. It presents key findings from the 2013 Global Risk Management Survey and asks captive executive and non-executive directors for their opinions on the rankings of various risks and findings as identified by more than 1400 risk decision makers, including risk managers, CFOs and CEOs.

The head of Aon’s financial services and professions group in Asia Murray Wood told SR that such research projects made it clear that risks were growing in complexity, becoming increasingly interdependent and requiring more innovative and creative solutions.

“This constellation effect or interconnectivity between risks might not always have been recognised by organisations but could have a significant impact on their approach to risk management and overall business performance,” he said.

Wood said that the Underrated Threats? report found that, as well as terrorism risk, cyber risk was “particularly poignant across Asia”.

“Organisations across Asia are facing an increasingly diverse and sophisticated array of threats to the security of their information management systems,” he said.

“Cyber theft, fraud, sabotage, espionage, and hacking (including from governments) are more frequent in the social media age and the associated costs with information security breaches are increasing for entities in every industry sector – from retail, financial institutions, healthcare, hospitality, media, communications, technology, consulting and professional services, to manufacturing and transportation.”

As Wood told SR recently :“From a risk manager perspective, there are obviously discussions to be had internally around the manner in which an organisation tries to manage, mitigate and transfer cyber risk.”