How do you see the changing global risk scenario for the corporates
The level of risks is going up dramatically. Both magnitude of risks and aggregate level of risk are rising. Not just traditional risks like property and casualty (P&C) and directors and officers (D&O), even non-traditional risks like global warming, cyber, terror, pandemic are rising. Risks appear to be inter-connected. For example, due to complex risks like supply-chain management, customers in North America got affected because of the Japanese tsunami.
But there is a vast change of attitude among companies for these new kind of risks. More people including board of directors chairmen, chief financial officers are getting careful about the impacts of various risks for the first time in the history.
What will be its impact on corporate performance
There is a great deal of pressure on corporate profitability due to all these risks. Level of anxieties, ambiguities and volatility have gone up in whatever they do. As a matter of fact, impact of catastrophic events get magnified during an economic downturn. However, if the corporate understands the risks, before it happens, it is a great opportunity.
Reputation is an equally is significant asset for companies, and as such, it requires priority attention and active management.
As eye catching as they are, successful reputation management is not just about recovering from crises. It is an ongoing activity embedded in corporate strategy. It is about developing a cohesive strategy and implementing it effectively.
How do you help clients
From our analysis, we know that about 80% of clients carry out brand events every five years and that costs 20% of their market cap. The action they take in the first five days determines statistically whether they are winners or losers. Aons Brand Restoration helps them to be a winner in that context. We see these risks as an opportunities and provide tools to strengthen corporate balance sheet, and reduce volatility. We advise the corporates how and where to place the risks.
What are your plans for India
Aon focuses on two important issues in the world risks and people. Today about 60% of the $8.5 billion, Aon helps companies around the world measure and mitigate risks and the remaining 40% tackle issues like pension, benefits and retirement. With a pole position as an insurance and reinsurance brokerage firm, Aon acquired Hewitt Associates last year in $4.9 billion deal making it a new HR power-house. For Aon Hewitt, after US, India is the second largest base in the world. The company has around 10,000 people working in India. The Indian market is evolving, and for us, it is on par with other sophisticated markets.
In terms of risks and HR, India is one of the most important locations in the world. A very large proportion of our leadership is located in India, the largest outside the US. In India, Aon has a 26% stake in AON Global Brokers. Indian corporate have started talking about both traditional and non-traditional risks.