Risk managers flag worries around geopolitical instability

Geopolitical instability is viewed as a major concern for corporate risk managers highlighting the volatile nature of the past few months, according to a new survey by Russell Group Ltd, a business intelligence company.

Some 69% of respondents choose geopolitical risk as the risk of most concern, out of a list of risks that included cyber/digital, supply chain disruption, climate/weather, business interruption (non-damage) and business interruption (damage).

Similarly, when asked to rank emerging risks, geopolitical instability and trade uncertainty dominated the list, being placed at one and two respectively.

The survey, titled ‘Quantifying the need for connected risk transfer’, surveyed 33 members of the Russell working group, which is composed of risk managers representing FTSE 100 and 250 companies.

Other findings in the report include the widespread use of scenario analysis in organisations, and the increasing desire of corporates to have their risks transferred, with up to 50% of respondents wanting between 25% to 50% of their losses transferred.

Suki Basi, Russell Group Ltd. managing director, commented on the findings of the survey: “Geopolitical risk is officially the number one risk of concern for corporate risk managers. A year ago, geopolitical risk would not have been considered a major risk of concern by many corporates. Yet, because of recent events, it has jumped up the list.

“The skyrocketing rise of geopolitical risk reflects the increasingly volatile nature of the geopolitical landscape, with events moving at a rapid pace forcing corporates to make decisions increasingly on the fly.

“It is imperative in this new landscape that corporates start to deploy and use scenario analysis to try and get ahead of events, and stress test the impact of likely events on their portfolios. Without having such an approach, corporates will increasingly be at the mercy of these fast-moving events along with the unintended consequences.”

For more news from AIRMIC Today, click here.

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.