AON report: Failure to innovate, now a top five risk for EMEA financial institutions
Moreover, the failure to innovate is now a top five risk and it is hitting companies' bottom lines: 24% of financial institutions say they have suffered financial loss during the last 12 months because of this risk factor, and 39% of EMEA financial institutions feel they are unprepared to adapt to it.
The threat of disruptive technologies is also now seen as a top 10 threat: 83% of companies fear their business is at risk of being lost to standalone Fintech companies, while 9% of businesses confirm they have already suffered a financial loss because of it.
The report also indicates that cyber-crime continues to rise up the risk agenda, moving into the top-5 risks, and "claims service" is now found to be the number one factor in choosing an insurer (previously 5th).
The "2017 EMEA Financial Institutions Industry Report" launched by Aon plc - the global professional services firm providing a broad range of risk, retirement and health solutions - looks at four key areas: Fintech, Cyber, Health and Credit risk, while also highlighting differences between EMEA and global trends.
For the second time running, damage to brand and reputation and economic slowdown emerged as the top ranked risks in the survey. However, both the perceived and actual threat faced by financial institutions from disintermediation, disruption and Fintech have increased with failure to innovate and meet customer needs now a top five risk.
"The risk environment for financial institutions continues to evolve rapidly as the magnitude, scope and complexity of risk increases globally. In particular, reputation remains critical for financial institutions, and this is demonstrated in the continued ranking of damage to brand as the number one risk. It is also interesting to see that the evolving economic landscape and trend towards disintermediation is reflected in the entry of failure to innovate and disruptive technologies to the top 10 risks, as financial institutions grapple with rapidly changing consumer and corporate habits", Enrico NANNI, Chief Commercial Officer EMEA Specialty at AON, said.
"The disruption to financial markets in the last decade confirmed that managing risk is key to achieving growth and profitability in an environment with more regulation, protracted low interest rates and tight capital requirements. The report provides comprehensive research and industry specific data on key topics and the findings allow organisations to benchmark their risk management and financing against their peers", Herman KERREMANS, Head of EMEA Financial Institutions at AON, added.
The report is based on Aon's Global Risk Management Survey and its Global Risk Insight Platform (GRIP).