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Examining risk to build reputational resilience
In this highly volatile world, risk is ever present — and because we are more interconnected and interdependent than ever before — it is also more severe. It is why at Aon we are not only focused on helping clients navigate the risks they are now facing, but we are also more keenly focused on helping them see around the corner to help them prepare for what comes next.
Today, clients are justifiably focused on the unprecedented socioeconomic impact of the COVID-19 pandemic, but they are also increasingly aware of other challenges like climate change, supply chain disruption, reimagining and configuring how and where work gets done, and the growing health-wealth gap. They are also learning how these issues connect to existing challenges. As a result, we are witnessing a fundamental reordering of client priorities on a global scale.
It is also why — now more than ever — reputational crises remain one of the major risk concerns for any organization anywhere in the world. Clearly, how leaders respond to these long-tail or "Grey Swan" risks are a key indicator of the overall strength of their leadership and their business.
2020 will remain a clear historical reminder of the importance of ensuring that an organization is prepared for all of its extreme risk scenarios. Research, experience, and our client engagement efforts make it clear that organizations need to reimagine their risk landscape, how it is rapidly changing and how to address these scenarios going forward.
If and when a reputation crisis occurs, this research reinforces the importance of promptly acknowledging the seriousness of the event itself but, most importantly, how to translate this understanding into decisive action. Such decisive action will instill confidence in colleagues, clients and communities.
Since 2017, Aon has proudly partnered with Pentland Analytics to produce exclusive independent research focused on a better understanding of why some organizations succeed and emerge stronger after a crisis while others fail. With an exclusive dataset that represents over 40 years of reputation crises, Pentland Analytics is in a truly unique position to identify and analyze this growing threat.
We believe the key findings and examples in this report will provide you with guidance and tools to prepare for what comes next.
- Greg Case, Chief Executive Officer, Aon
The global impact of the novel coronavirus (COVID-19) pandemic has reminded us all of the challenges we face in managing extreme events. Certain events are so extremely rare, they have yet to be imagined. They are "unknown unknowns" with unpredictable causes.
And then there are others: occassionally referenced and seldom defined. These events too, are rare, but we know that they exist. However, they are not so rare that we cannot make sense of them.
In the report Respecting the Grey Swan: 40 Years of Reputation Crises, Aon partnered with Pentland Analytics to produce research focused on a better understanding of why some organizations succeed and emerge stronger after a crisis. Dr. Deborah Pretty of Pentland Analytics proposes that many extreme events are referred to as "Black Swans"1 but, once investigated, are found to be "Grey Swan" events. These Grey Swan events are "unknown knowns" that are anticipated, discussed and warned about with increasing urgency, but the warnings are unheeded.
Grey Swan Events from the Past 20 Years
The report proposes that analysis of the impact of Grey Swan events offers the most potential for improving risk management strategies and making value-enhancing decisions.
Drawing on 40 years of data from Pentland Analytics' Reputation Crisis Databank, Respecting the Grey Swan focuses on analysis of the reputational risk impact of Grey Swan events on shareholder value.
Key findings that emerged in the creation of the report included the following:
"Today, business leaders are justifiably focused on the unprecedented socioeconomic impact of the COVID-19 pandemic, but they are also increasingly aware of other challenges like climate change, supply chain disruption, reimagining and configuring how and where work gets done, and the growing health-wealth gap. They are also learning how these issues connect to existing challenges. As a result, we are witnessing a fundamental reordering of business priorities on a global scale. "It is also why – now more than ever – reputational crises remain one of the major risk concerns for any organization anywhere in the world. Clearly, how leaders respond to these long-tail or 'Grey Swan' risks are a key indicator of the overall strength of their leadership and their business. "We believe the key findings and examples in this report will provide you with guidance and tools to prepare for what comes next."- Greg Case, Chief Executive Officer, Aon