Cyber attack-data breach is top business risk facing financial institutions
Aon plc (NYSE: AON), a leading global professional services firm, has announced the results of its 2023 Global Risk Management Survey, which gathered input from nearly 3,000 risk managers, C-suite leaders, treasurers, talent professionals and other executives from 61 countries and territories to identify their most pressing business challenges.
The 2023 edition of Aon’s biennial survey found the top three business risks facing financial institutions globally are cyber attack/data breach, regulatory/legislative changes, and economic slowdown/slow recovery.
The survey revealed that only 60% of financial institutions have plans in place to respond to the risks, compared to 65% in 2021. When evaluating organisations’ risk posture against the top ten risks, only 20% of the companies have quantified risks while 28% have developed a risk management plan. Furthermore, the industry recorded a 26% average loss of income from the top ten risks, down 8% from 2021 though still having a significant financial impact on organisations.
Sucheng Chang, Aon’s head of Hong Kong, said, “Issues with cybersecurity and compliance regulations can lead to cascading effects, such as the risk of damage to brand or reputation which ranked ninth and business interruption which ranked tenth. We see leading financial services firms constantly evolving to mitigate these risks, with best-in-class organisations implementing advanced data analytics and capabilities to assess, quantify and manage the risks they face today and those expected in the future.”
The survey further shows that financial institutions ranked failure to attract or retain top talent at eighth and anticipate it to rise to third place as a future risk, demonstrating a shift in how risk managers will perceive human capital in the future. Shortfalls in talent and critical specialised skills can hamper innovation and competitiveness and increase exposure to cyber attacks, regulatory breaches, supply chain issues, and business interruption for financial institutions.
Lee Voon Keong, Aon’s head of Talent Solutions in Hong Kong, said, “The growing interconnectedness of risks in an unstable business environment makes the race to secure skilled talent and upskilling the existing workforce to address these risks more important than ever. With evolving technologies, coupled with an ageing workforce, the growth of financial institutions in Hong Kong will greatly depend on the ability of organisations to attract top talent with the necessary skills and creativity, in order to remain relevant in a competitive market.”
The top ten business risks for the financial institutions industry, according to the 2023 Global Risk Management Survey, are:
1. Cyber Attack/Data Breach
2. Regulatory/Legislative Changes
3. Economic Slowdown/Slow Recovery
4. Cash Flow/Liquidity Risk
5. Technology/Systems Failure
6. Environmental Risk
7. Interest Rate Fluctuations
8. Failure to Attract or Retain Top Talent
9. Damage to Reputation/Brand
10. Business Interruption
Aon’s Global Risk Management Survey is a biennial web-based research report, was conducted in June to July 2023. The research gathered the responses from 2,842 decision makers including risk managers, c-suite leaders, treasurers, human resources and talent professionals from 16 industry clusters, which include small, medium and large companies in 61 countries/territories around the world.
The Financial Institutions Insights from the Global Risk Management Survey report are available here.
