C-Suite has greater willingness to invest in risk and resilience due to pandemic experiences
- Published: Friday, 01 October 2021 08:14
New research by Aon finds that the pandemic exposed new organizational vulnerabilities, driving C-Suite willingness to invest in preparation for other long-tail risks. This was one of the key results in a new survey-based report, ‘A New Approach to Volatility: The Importance of Making Better Decisions’.
More than 18 months since the global outbreak of the COVID-19 pandemic, Aon surveyed 800 C-suite leaders and senior executives in the US, the EU, the UK and Canada to reveal how organizations are preparing for and responding to interconnected risks. The survey follows Aon's research conducted in 2020, and reveals that a year later, business leaders have a renewed confidence in the economy and a greater appetite to embrace calculated risks.
"We are at an inflection point where businesses are not only focused on overcoming the current challenges we are facing, but shifting to think about other long-tail risks and how to prepare for them," said Greg Case, Chief Executive Officer of Aon. "As leaders look at the future of their businesses in an increasingly volatile world, the pandemic has reshaped their views of risk and sharpened the importance of making better decisions. The past year has given leaders the insight they need to understand the dynamics of long-tail risks and the need to be better prepared, sparking optimism for what lies ahead."
Additional findings from the survey include:
- A majority predict significant growth: about four in five leaders (79 percent) estimate growth in the year ahead and 40 percent expect double-digit revenue growth. Among the 38 percent of leaders who indicated they were ‘very prepared’ to deal with the pandemic, 55 percent estimate double-digit revenue growth.
- Preparedness paid off, but the C-suite could exhibit a confidence bias: the research revealed a disconnect between C-suite executives setting the strategy and the people on the ground executing that strategy. Only 12 percent of C-suite leadership felt their company was unprepared for the pandemic, compared to 22 percent of senior executives.
- Successful leaders are risk-aware, not risk-averse: most leaders (80 percent) say the pandemic experience has increased their companies' appetite to take on more risk and make investments in order to build resiliency for the future.
- Failure to prepare and act weakens companies significantly: companies who were weakened by the pandemic - 32 percent of those surveyed - struggled to integrate risk assessment into decision-making and to focus on the interconnectedness of varying risks. Companies that were unprepared and subsequently weakened by the pandemic fell behind their successful counterparts in two key areas: access to financial protection against losses and the ability to keep employees safe and productive throughout the pandemic. Conversely, strong companies took a holistic, integrated view to pandemic response and reported risk integration as key to their approach to disarming evolving risks.
- Stronger companies value data, analysis and expertise: Surveyed C-suite leaders and senior executives place more value on models, analytics or data science tools - 61 percent - to ensure their company makes better decisions. Among stronger companies, 61 percent also state they are very confident they have the ability to analyze available data and information to make sound decisions going forward.
"Our research shows that executives are confident in the future and have prioritized the need to be better prepared for risk in the wake of the pandemic," said Lori Goltermann, Chief Executive Officer of Enterprise Clients at Aon. "When speaking with CEOs and other leaders through our Enterprise Client Group, these findings validate their experience and reinforce our role in delivering solutions that give our clients the clarity and confidence to make better decisions that protect and grow their businesses."
The research was conducted in August and September 2021 through 800 online interviews with C-suite and senior business leaders, spanning diverse industries including technology, finance, production and service companies. The survey builds upon the 2020 research, ‘Are You Prepared for the Next Big Threat?’ and adds a perspective from Canadian business leaders.