Everybody hurts

Apr 21 2009 by Nic Paton Print This Article

Attracting or retaining top managerial talent is now way down the priority list for most executives, as new research has suggested that virtually no company, industry or country has been immune to the unprecedented global downturn of the past 18 months.

Research by insurance company Aon on the top 10 risks facing organisations around the world has concluded, perhaps unsurprisingly, that the economic slowdown is the issue at the forefront of managers' minds, whatever country or industry they are working in.

What though is more surprising, given the importance that was being attached to it by many executives not so long ago, and in many surveys often still is, is the lack of emphasis now being given to attracting and retaining top talent.

This challenge or "risk" is now fully 10th on the list, even though many observers have suggested it is something firms should not be ignoring, even in the current crisis, if they want to be best placed to benefit from the upturn when it comes, probably next year.

Instead the next most pressing challenge after the economy is red tape, or "regulatory and legislative changes", according to Aon.

This is followed by business interruption and increased competition, fluctuating commodity prices and more general damage to the organisation's reputation.

With many organisations still struggling to get what they want from cash-strapped banks, cash flow and threats to liquidity comes in seventh on the list.

This is followed by the risk of a distribution or supply chain failure, third-party liability and, finally, the "failure to attract or retain top talent".

While most organisations had increased their overall risk preparedness compared with a similar survey in 2007, fewer than half still tracked and managed all their potential risks effectively, or the insurable cost they potentially faced, warned Stephen Cross, chief executive of Aon Global Risk Consulting.

Even more importantly, when it came to three of the top ten risks (economic slowdown, damage to reputation and regulatory/legislative changes), fewer than two thirds said they had formally reviewed the risk or had a plan in place, he added.

The survey also found clear evidence that virtually no company, industry or country had been immune to the economic turmoil of the past few months.

Reputational risk, which had been in the number slot in the 2007 survey, had slipped down the list in part because, in the current straitened times, the costs of meeting regulations and legislation had become proportionately a greater burden and headache for many of the organisations polled.

With a much tougher regulatory regime on the cards within the financial sector, for one, the cost, quantity and complexity of regulation presented serious compliance challenges for multi-national companies, Cross added.

"While these complex risks carry with them a degree of unpredictability that may impact an entire enterprise, they are in fact manageable," pointed out Cross.

"Those organisations prepared to capture opportunity will lead the way out of the economic downturn with robust and proven risk management strategies in place, and clear objectives set for future success," he added.