Employers warn of 'serious repercussions' stemming from inability to recruit, retain talent
Failing to attract and retain talent emerged as one of the top business risks for organisations today, according to a new report from Aon plc.
It landed fourth in the top 10 global risks listed in the biennial 2023 Global Risk Management Survey, which polled almost 3,000 risk managers, C-suite leaders, and other executives from 61 countries and territories.
Failing to attract and retain talent failed to break the top 10 in the previous edition in 2021. This is also the highest-ever ranking of the issue since the report began in 2007.
The report said this indicates that human capital issues are no longer just a "people problem," but a key business risk.
"We are at a pivotal moment in time, when business leaders are recognising the true cost of human capital challenges and the reality that people risk intensifies all other top business risks," said Lambros Lambrou, CEO of Human Capital at Aon, in a statement.
But a significant gap between awareness and preparedness for the issue is also present, as the report found that only 11% of respondents said they have quantified their people risks.
Why is it a top risk?
According to the report, organisations' inability to recruit and retain the best possible talent can have "serious repercussions."
"Shortfalls in talent, workforce, or critical specialised skills can hamper innovation and competitiveness and increase exposure to cyberattacks, regulatory breaches, supply chain issues, business interruption, and reputational damage," Lambrou said.
Recruitment problems can also negatively impact the remaining workforce, who will be left to shoulder additional work and responsibilities, according to the report.
"This increased pressure can lead to burnout, disengagement, and retention issues," the report said.
Other top risks for organisations
But beyond recruitment and retention issues, the respondents said their biggest risks are cyber-attacks and data breaches.
The report found that employers have the highest level of risk readiness for the issue, as well as the highest percentage of risk mitigation actions compared to other risks listed. Overall, the full top 10 global risks include:
- Cyber-attacks/data breach
- Business interruption
- Economic slowdown/Slow recovery
- Failure to attract or retain top talent
- Regulatory/legislative changes
- Supply chain or distribution failure
- Commodity price risk/scarcity of materials
- Damage to reputation/brand
- Failure to innovate/meet customer needs
- Increasing competition
Climate, AI missing
Climate and artificial intelligence (AI) only landed 17th and 49th place, respectively, despite massive conversations surrounding these matters as of late.
The report also stressed that AI is one of the "most pressing concerns" as it could introduce new risks and change the severity of existing ones.
According to the report, AI could hike cybersecurity exposure and amplify human capital risks.
"Risk managers who understand the liabilities and insurance implications of AI across their digital value chain add value to their enterprise AI strategy," Aon said in its media release.
As for climate, Andy Marcell, CEO of Risk Capital and CEO of Reinsurance Solutions at Aon, said this was an "urgent one" with "increasingly monumental implications" for businesses.
"What leaders need now are insights from advanced analytics and modelling alongside innovative parametric solutions that will help them make better decisions today and protect them in the future," Marcell said.
