The right knowledge at the right time can literally change the world. In the globally interwoven corporate environment of today, risks to businesses are becoming more complex in nature and global in consequence.

Managing and mitigating risk is a necessity for survival in this diverse, competitive and fragile marketplace, says Steve McGill, group president of Aon and chairman and CEO of Aon Risk Solutions.

“The ability to anticipate opportunities and effectively respond to threats is critical to organisations in grappling with new challenges,” McGill says.

But the input of 1,415 respondents in the latest biannual Aon Global Risk Management Survey reveals that risk leaders are struggling to identify and manage the major risks facing their organisations. On average, reported loss of income from the top ten registered risks rose 14 per cent, from 28 per cent in 2011 to 42 per cent in 2013, while reported readiness fell 7 per cent, to 59 per cent.

For the third consecutive study since 2009, the top risk facing the Asia-Pacific region for the next three years was economic slowdown or slow recovery. The next four include regulatory or legislative changes, greater competition, damage to brand or reputation, and failure to attract or retain top talent.

These top-five risks are interrelated, with the prolonged economic recovery straining resources, hampering their ability to mitigate many risks.

Mark Enticott, managing director of Ambition Hong Kong, says the economic environment has made companies more penny-wise, more prone to tread water and more susceptible to risks.

“Companies are being very cost-focused,” Enticott says. “Some companies have cut back in terms of staffing, and I think there is an element of some businesses potentially not evolving as risks change.”

Regulatory and legislative changes in the wake of the economic crisis are now seen as the number-one risk by the banking, government, health care, insurance, investment and finance, utilities, pharmaceuticals and biotechnology, telecommunications, and broadcasting industries.

Although heavy regulations have an impact on all these industries, the financial sector has seen most changes. The balance of regulation is crucial to financial institutions because while the rules have a purpose, banks and financial institutions have to run efficiently, effectively and make money.

“We have seen a significant increase in regulations in the banking sector. It is vitally important for government and regulatory bodies to get the balance right in protecting the public while ensuring it does not cause problems and become cost-prohibitive,” Enticott says.

Cindy Yau, manager of finance, audit, and risk and compliance (banking) at executive search firm ConnectedGroup, echoes Enticott’s sentiment and the survey findings on regulatory and legislative changes.

“If we look at the AML [anti-money laundering] fines paid out by many banks, regulatory changes and risk factors not only affect compliance and risk teams, but internal technology, operations, legal and front office too,” Yau says. “Regulatory changes have a direct impact on the business and increased constraints put more pressure on the bottom line, driving up costs.”

Failure to attract and retain top talent is another related risk affecting nearly every industry, says Nicholas Clarke, regional director of strategic account management at Aon. “There is a massive shortage of quality and experienced individuals and very few firms have effective succession planning and training of key staff,” he says.

Linking this talent issue to brand reputation, Sharmini Thomas, regional director for Michael Page in Hong Kong, says that an organisation’s employer and consumer “brands” are very important to job hunters in Hong Kong.

“The Hong Kong market can be best characterised as one that is highly competitive for the best talent, as organisations tend to poach from their competitive set with regards to hiring,” she says. “Individuals have a multitude of hiring options and jobseekers prefer brands associated with stability, performance, a high standard of ethics and growth orientation.”