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Risk awareness soars, costs plummet

By Victoria Young
2 minute read

Businesses in various industries cite corporate governance as their number one risk fear.

Corporate governance is the premier risk concern for Australasian firms for the second year running, an Aon Australia survey found.

Businesses face being choked by compliance, Aon Australia research and development national manager Ross Castle said.

"The challenge for directors and executives however, is to avoid becoming so risk averse that they are strangled by compliance, as this results in lack of innovation and a decrease in organisational performance," Castle said.

Corporate governance involves the promotion of fairness, transparency and accountability within a business.

System risks and human resources were rated as the most critical risk concerns after corporate governance for 2006/7.

"Focusing on risk, understanding it and mitigating against it drives improvements and innovations across our organisations," Castle said.

Aon studied 290 major Australian and New Zealand corporate and public sector organisations across a range of industries for its Australasia Risk Management and Total Cost if Insurable Risk Survey.

Most businesses, 94 per cent, said their boards were actively involved in risk management, either through reviewing and approving risk management policies and systems or evaluating business risks.

One-third of respondents have a chief risk officer, it found.

Insurance costs are plunging, with the median cost of insurable risk down almost a quarter from last year to $6.67 per $1000 of revenue.

More than half of Australian organisations sell their risks into the insurance market, where as only one in five do in New Zealand.

QBE continues to be ranked the most respected insurer, the survey found.