New Zealand Survey of Risk

Marsh is pleased to present our eighth New Zealand Survey of Risk Report in partnership with the Institute of Directors (IoD).

This report discusses the current risk issues for New Zealand businesses and how they are managing risks, the emerging risks of cyber security and ESG, and outlines key steps to mitigate risk. This report reflects the broad New Zealand business landscape in terms of business size, type, location and industry sector. Over 50% of respondents represent the important voice of small to medium sized businesses, with healthy participation from publicly listed companies and not-for-profit organisations. 47.41% of respondents are Company Directors and 27.15% are CEOs/Managing Directors/General Managers.

Top 5 Risks for 2021

1. Brand and Reputational risk

Brand and reputational risk is a top risk. Strong brand and reputation embody the trust between a business and its customers. It takes years to build, and can be lost in an instant.

2. Pandemic

Infectious disease has consistently been on the global risk radar, but not rated as a key risk for businesses until recently. Given the current climate and the impact of COVID-19 around the world, the risk of pandemics are now at the forefront of businesses minds.

3. Lost Productivity caused by a lack of skilled workers

Prior to the pandemic, New Zealand businesses were fiercely competing for skilled workers. The pandemic has heightened the impact of lost productivity caused by the lack of skilled workers.

4. Non-compliance with legal and contractual obligations risk

Businesses are facing pressure to meet stricter legislation regimes and stringent reporting requirements. Failure to comply could lead to detrimental reputational, financial and legal consequences.

5. Workplace health and safety risk:

People-related exposures, such as health and safety, are gaining increasing attention. With increasing health-risk protection and well-being benefit costs for business, it is no wonder that workplace health and safety is a top risk for organisations.

Spotlight on Emerging Risks

Cyber Security Risk

Cyber security has become one of the most common and fastest growing risks for businesses over the past 20 years, regardless of industry, costing businesses nearly $450 billion annually. The dynamic growth of technology and the adaptation of digital transformation, artificial intelligence and robotics have increased both the threat landscape for businesses and provided a bigger playground for cyber criminals. When you add human error, mis-figured hardware and software to the mix, there are multiple streams of cyber risk to manage.

ESG Risk

ESG is a widely used set of metrics analysing environmental, social and governance performance. It is increasingly used to determine which programs, funds and companies to invest in. Survey results show that there is still a low level of understanding of ESG risks amongst companies in New Zealand and across all industries, company structures and turnovers. Less than 25% of respondents are identifying ESG risks, with fewer integrating ESG risks into their risk management framework. Even fewer are evaluating their financial exposure to ESG risks. This includes the impact of climate change on the supply chain for operations.

Putting your Risk in Focus

Faced with more frequent and unpredictable risks, businesses need preparedness and resiliency plans to do a better job of anticipating and minimising impacts on their bottom line and operations. Today’s risks are harder to identify, understand, quantify, and manage. In a risk landscape that continues to shift, businesses cannot afford to stand still. It may be time to identify, assess and prioritise the critical risks that can threaten your business and understand the steps you need to take to build risk maturity and resilience.