OnSolve has published its 2023 OnSolve Global Risk Impact Report, which found significant increases in three rising threats globally in 2022 when compared to 2021. These were infrastructure and technology (+688 percent globally, +807 percent in US), transportation accidents (+211 percent globally, +296 percent in US) and extreme weather (+72 percent globally, +42 percent in US). Despite the increasing prevalence of physical threats, many C-suite leaders appear to be unprepared to mitigate the impact on operations and people.
The report’s conclusions are based on an examination of more than nine million global events detected by OnSolve Risk Intelligence from January 1, 2021 through to December 31, 2022. Additionally, to analyze corporate approaches to physical risk mitigation alongside the physical threat data, OnSolve commissioned a survey in January 2023 of 250 CEOs based in the United States, with 100 or more employees. The survey was conducted by Censuswide, an international market research consultancy.
From tornadoes to train derailments to power outages, up to 10 physical threats occurred globally every minute in 2022. Despite this, more than half of CEOs surveyed (60 percent) have no plan to address all the most severe physical threats to their business. For almost half (46 percent), this lack of preparation means they have identified and planned for only some of the most significant threats to their organizations, leaving their people and operations at risk.
Additionally, only 37 percent of CEOs said they have a plan for extreme weather and only 29 percent have a plan for infrastructure failures. The number drops even lower to 25 percent for a plan to handle transportation accidents. This reveals a large gap between the level of risk and proactive preparation for the largest threats to organizations.
“Physical threats have significant ripple effects on businesses and industries, from impacting communities and workers to operational downtime and supply chain delays,” said Mark Herrington, CEO at OnSolve. “To better protect people and remain competitive, C-suite teams must lead the dialogue and be proactive in mitigating these physical threats. In the same way senior leaders were involved in building cyber security strategies and responding to the pandemic, which impacted all aspects of the business, executive leaders must be more involved in developing a strategy supported by sufficient resources for crisis mitigation.”
Other key findings include:
Physical threats have a cascading impact. The rise in physical threats is compounded by their interconnected ripple effects on other business operations. From road closures to power grid failures and chemical spills across entire communities, these ripple effects are the most challenging aspects of crisis preparation and management. Now more than ever, organizations must sufficiently prepare for all physical threats and the dynamic risks that may follow.
CEOs are aware of physical threats, but more involvement in mitigation strategies is needed. Every CEO believes her or his organization will face at least one physical threat in 2023. CEOs have noted that preparing for physical threats is now a top priority (38 percent) — even more than those prioritizing economic inflation (30 percent). While most CEOs (78 percent) delegate crisis management responsibilities, 18 percent admit they do not have anyone in the C-suite overseeing physical security and duty of care.
The C-suite is facing pressure from corporate boards and employees to address physical threats. Almost all (99 percent) corporate boards have asked executives for plans that combat physical threats. Meanwhile, employees are also concerned. Just over half of CEOs surveyed (51 percent) said their employees are sharing more concerns about physical security since the beginning of the COVID-19 pandemic.
CEOs acknowledge technology would protect their organizations from physical threats. While 93 percent of CEOs believe technology would help protect their employees and operations from physical threats, only 26 percent say they have invested in technology for that purpose (though an additional 48 percent are prioritizing such an investment this year).