Energy price shocks and asset bubbles pose the greatest risks to doing business in Australia, according to World Economic Forum (WEF) survey data published by the strategic partners of the WEF’s Global Risks Report, Zurich Insurance Group and Marsh & McLennan Companies.
The Australian data provides a window into the threats that are top of mind for local executives, and is drawn from the WEF’s Executive Opinion Survey, which asked 12,411 executives across 136 countries to identify their five biggest risks to doing business over the next decade. These are the risks that brokers can address and help manage for their clients.
This is a massive jump for energy pricing’s risk rating; last year it was fifth on the list for Australian businesses.
Energy prices and asset bubbles are closely followed by cyber attacks, high unemployment, critical infrastructure shortfalls as well as climate change as top risks.
Giles Crowley, Head of Commercial, Zurich Australia and New Zealand, said: “The results demonstrate that Australian businesses are focused on the here and now, which is understandable with the ongoing debate about energy policy and questions around interest rates and the property market.”
Australia is the only country to rank energy price as its major concern, and the only other nation apart from Canada to include adapting to climate change within its top five risks.
In aggregate, the global results were dominated by concerns about social and economic issues, with unemployment, failures of national governance, social instability and the prospect of fiscal crises all making the top five.
Crowley continued, “The prominence of cyber in the local results is also consistent with the conversations we’re having in the market – it’s absolutely top of mind for Australian boards and management teams.”
Brokers can play a prominent role in assisting clients with risks that concern them most. Crowley said further that there will be dividends for those who develop robust risk management strategies that gives businesses options amid uncertainties. “Irrespective of where these risks are coming from, the big question for Australian executives is how they mitigate and manage them to make their businesses more resilient.”
Costa Zakis, Pacific Head of Marsh Risk Consulting, said: “Energy pricing’s leap to pole position reflects how pressing an issue securing our energy supply has become for Australian businesses. While energy price shocks add to the cost pressure and challenges profitability for all businesses, in sectors like manufacturing, the prospect of energy shortages poses a serious threat to their ability to operate.”
Executives in most regions highlighted unemployment or ‘underemployment’ and ‘fiscal crises’ as the two greatest risks, although those in North America and East Asia and Pacific regions were most concerned by cyber attacks and asset bubbles.
Following an increase in geopolitical risk, sometimes fuelled by protectionist policies, business leaders in Europe, South Asia, Latin America and the Caribbean and Sub-Saharan Africa were worried about the potential failure of national governance.