The first report examined executives’ sentiments about four key risk areas: technology, business, environmental, and political and economic risk. The report provides an evaluation of how COVID-19 has impacted leaders’ sense of resilience and ability to manage risk.
Key findings include:
- Eighty-five per cent (85%) of leaders consider the current business environment as moderate to high-risk. However, leaders are most worried about the technology and business-related risks they perceive as easier to manage.
- Thirty-seven per cent (37%) ranked technology has the highest category of risk affecting their organization, followed by business (33%), political and economic (18%) and environmental (12%).
- Cyber is the technology risk highest on leaders’ list of concerns; however, they also feel prepared to handle it, with 44% saying they felt “very prepared” to manage cyber risk.
- Pandemic is also seen as high-risk, but respondents also felt well-prepared to handle it. Pandemic risk sits in the environmental category, which is the lowest-ranked risk overall.
Survey respondents ranked risks according to how significant they were to their business and how resilient they felt to them. According to the report, where businesses want more support from insurance and risk management is with risks falling within the high-risk/low-resilience categories. These include risks connected with supply chain, business interruption, climate change, politics, legislation and regulation, disruption and disintermediation, and the environment.
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Nine out of 10 respondents felt their businesses were either moderately (56%) or highly (35%) resilient, and 85% said they expected to feel more resilient in 12 months’ time.
The study found wide disparities in how resilient different sectors felt to risk, with the impact of the pandemic likely a key driver on leaders’ states of mind. Sectors that felt more resilient than they did 12 months earlier include technology, media and telecoms, financial institutions, and healthcare and life sciences.
Sectors feeling less resilient include hospitality and entertainment – one of the sectors hit hardest by the pandemic – and the public sector, including education.
“We have carried out this research at a time of significant change for almost every organization and industry,” said Lou Ann Layton, Beazley’s head of broker relations and marketing. “The insights captured in this report help us bridge knowledge gaps and build greater understanding among the insurance industry of what firms need from us now and in the future.
“As insurers, we cannot rely on past perspectives of what our clients want or need. Understanding businesses’ risk appetites, where they feel most vulnerable, and where they need our help to build resilience to a disorientating array of risk exposures, is critical to our ability to provide the value, expertise and services our clients need.”
“One of the key learnings from the pandemic is that, by and large, businesses have survived, adapted and thrived,” said Bethany Greenwood, head of cyber and executive risk and interim co-chief underwriting officer at Beazley. “Almost half feel more resilient than one year ago, and 84% are confident they will be even more resilient in a year’s time. This is incredibly positive given the challenges businesses have had to contend with over the last 15 months.”
However, Greenwood stressed that the effects of the pandemic were still being felt.
“As lockdowns end and government stimulus packages are withdrawn, organizations will need a clear view of their evolving risk exposures,” she said. “The insurance industry’s role in supporting clients to proactively manage their less predictable and harder-to-quantify risks is even more important to help build overall resilience.”