Natural catastrophes (28% of responses) again ranked third in this year’s top 10 ranking of global business risks with 2018 being a more benign version of 2017’s peak catastrophe losses, although economic losses still totaled close to $150bn. Ongoing uncertainty over Brexit, global trade wars and tariffs fuel corporate concerns about Changes in legislation and regulation (#4 with 27% of responses).
Climate change (#8 with 13% of responses) and Shortage of skilled workforce (#10 with 9% of responses) are the biggest climbers globally in this year’s survey. Climate change could not only be a harbinger of increasing losses and disruption from extreme weather events and natural catastrophes but is also likely to have big implications for regulation and liability considering rigid emission targets and new reporting and disclosure requirements in many sectors.
Shortage of skilled workforce appears for the first time among the 10 top business risks globally as well as for many countries in Central and Eastern Europe, the UK, US, Canada and Australia. It is driven by factors such as changing demographics, Brexit uncertainty and a shallow pool of talent in the digital economy.
“Skilled workforce — and human capital more generally — has become the scarce resource of the digital economy,” says Ludovic Subran, Deputy Chief Economist of Allianz. “Competition is fierce between companies to get new recruits with competencies in artificial intelligence, data science, or ‘frontier risk management’ such as managing cyber or reputational risk as most of these jobs did not exist 10 years ago. Even attractive salaries do not suffice as the pool of recruits with the needed skillset is limited and the urgency to onboard them does not allow for on-the-job training.”