Pedestrians turn to look down Fulton Street as the final piece of the spire, centre, is lifted. The tower is slated to open for business in 2014. Tenants include the magazine publisher Conde Nast, the U.S. government’s General Services Administration and Vantone Holdings China Center, which will provide business space for international companies.LUCAS JACKSON/Reuters
Global companies might have put the financial crisis behind them, but one risk-management executive says they are facing more risks than ever.
Gregory Case, chief executive officer of London-based Aon PLC, says many companies are under-prepared for such pressing concerns as cyber-threats, terrorism, social media, and global warming.
"Non-traditional risks are coming to the fore," Mr. Case said. "These new risks create a level and a magnitude of risk than has ever been out there before."
Aon, which has 65,000 employees in 120 countries, sits between businesses and insurance companies in the role of risk adviser. Aon specializes in reinsurance, risk-management services and human resources consulting. Its insurance brokerage business is one of the biggest in the world.
Local disasters – like the nuclear meltdown in Japan, or flooding in Thailand – can affect companies around the world as distribution chains snap and factories shut down.
But financial and brand threats now also come from unlikely individuals. Fast-food chain Subway learned that after one Australian teen asked why his foot-long sub was an inch shorter than promised. The issue went viral, and several lawsuits were launched against the company.
But while the risks have become broader and farther reaching, Mr. Case said in an interview that they can be controlled. "First, you have to know what you're trying to protect. We translate it back to three things: the operating performance of a company, the financial strength of the company, and the earnings volatility of the company." He was in Toronto to speak at a Toronto Region Board of Trade lunch in Toronto on Wednesday.
Aon knows risk well, because it has roots in insurance that date back nearly a century. In the 1980s and 1990s the company blazed the acquisition trail, picking up many personal and commercial and life insurance businesses.
Mr.Case joined the firm eight years ago, and under his leadership it exited a volatile and less-profitable underwriting business, which accounted for one-third of revenue, by selling two major businesses for (U.S.) $2.75-billion in 2007. In 2008, Aon acquired both a large reinsurance company and a human resources firm and cemented its shift toward consulting.
It's been a successful shift, with the company's stock up 42 per cent in the past five years, and more than 18 per cent year to date.
One of the next areas of focus for the company is information databases. Mr. Case jokes that his industry has "always had lots of data and not much insight" – it's something he wants to change. Aon has compiled the "biggest database of risk information in the world" by collecting information from more than 1,000 insurers around the world, as well as other organizations.
Pattern recognition, and identifying pockets of risk, helps Aon target new clients.
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(Jacqueline Nelson is a Globe and Mail Financial Services Reporter.)
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