Human capital is no longer simply a “people problem” but a key business risk that is fuelled by rising health care costs, the competition for talent, workforce shortages, and a lack of retirement preparedness, said Aon recently.
According to results of the firm’s 2023 Global Risk Management Survey of about 3,000 risk managers, C-suite leaders and other executives from 61 countries and territories, "attracting and retaining top talent" ranked fourth globally, after not breaking the top 10 in 2021, demonstrating a shift in how risk managers are viewing human capital today.
Still, only 11% of survey respondents indicated they have quantified their people risks, illustrating a significant gap between risk awareness and risk preparedness, Aon noted.
"We are at a pivotal moment in time, when business leaders are recognising the true cost of human capital challenges and the reality that people risk intensifies all other top business risks," said Lambros Lambrou, CEO of Human Capital at Aon. "Shortfalls in talent, workforce or critical specialised skills can hamper innovation and competitiveness and increase exposure to cyberattacks, regulatory breaches, supply chain issues, business interruption and reputational damage."
Overall, the top ten global risks according to the 2023 Global Risk Management Survey are:
- cyber attacks/data breach
- business interruption
- economic slowdown/slow recovery
- failure to attract or retain top talent
- regulatory/legislative changes
- supply chain or distribution failure
- commodity price risk/scarcity of materials
- damage to reputation/brand
- failure to innovate/meet customer needs
- increasing competition
Notably only two of the top five current risks are insurable and half of the overall top ten is presently uninsurable, Aon said.
Despite warnings and headlines, climate (ranked 17) and artificial intelligence (AI) (ranked 49) are notably missing from the global top 10 ranking, suggesting a lack of awareness about the potential impact of these issues on the corporate risk profile, Aon noted.
More immediate climate driven risks include property damage, impact of severe weather, natural catastrophes, and the consequences for business of climate-related regulatory changes and compliance obligations, the firm pointed out.
