Local economic conditions have surpassed regulatory and legislative policies as the foremost risk facing Australian businesses, says Aon Australia.
In its 2015 risk survey, Aon said growth prospects and inflation forecasts have elevated concerns of a domestic economic slowdown and the subsequent effect on business growth and recovery.
Aon Risk Solutions managing director of global and corporate, Jason Disborough, said local economic conditions have continued to be flagged as a notable risk in recent years.
“Changing trading conditions, the weakening of the Australian dollar and the evolving political landscape, aligned with relatively high unemployment and an ongoing skills gap in some of Australia’s most pertinent industry sectors, have presented a challenging risk environment for organisations to try and manage,” Mr Disborough said.
“It is, therefore, more critical than ever for organisations to develop efficient and effective risk management solutions, while remaining flexible and responsive to changes in both the local and global economy.
“Without such support it will be impossible for Australian industries to innovate successfully to overcome such challenges,” he said.
According to the report, regulatory and legislative change, brand and image, and increasing competition follow domestic economic conditions as leading business risks.
The National Australian Bank, in its March Quarterly Business Survey, reported that business confidence dropped below the long-term average in the first quarter of 2015.
NAB also said that falling business confidence is consistent with a “downbeat” economic outlook for 2015.
According to Mr Disborough: “While the current state of the market presents a very real challenge to Australian businesses, it also presents an opportunity for insurers to innovate around these soft risks, a provision currently deficient in the Australian market."
Aon pointed out that cyber security is a notable risk facing both Australian and global companies.
However, only 13 per cent of risk managers identified it as significant.