Business leaders are facing uncertain times ahead, but there are plenty of steps they can take to mitigate the risks, writes Rachael Ingle, CEO, Aon Ireland
Over the course of the last few months, businesses across Ireland and beyond have faced into some of the most challenging conditions seen in recent decades.
While many organisations have just come to terms with the post-pandemic world of work and altered business landscape, new risks have rapidly appeared on the horizon. From geopolitical instability through to inflation and the spectre of a possible global recession, business leaders are looking to prepare themselves for the impact of a more difficult economic outlook here in Ireland.
According to the results of Aon’s latest Business Decision Maker Pulse survey, Irish business leaders clearly recognise the growing array of economic risks they now face and the impact these risks are likely to have, not only on their own business, but also on the sector in which they operate.
Emerging risks
Our research, which surveyed 228 senior business leaders in Ireland at companies employing more than 250 people, has found that economic slowdown is now seen as the top risk facing Irish companies, followed by inflation and failure to attract or retain top talent.
The growing unease concerning today’s emerging risks, including inflation and rising energy costs, is having a tangible impact on Irish businesses and their plans for the coming months.
Over half of leaders across Ireland believe that rising energy prices will hinder their ability to grow within the next six months. Meanwhile, five-in-ten leaders expect low economic growth, with 41 percent anticipating a recession in Ireland.
Although significant, the number of business leaders in Ireland anticipating recession is lower than the number of business leaders globally, 79 percent of whom expect a recession this year, according to a comparative global survey carried out by Aon.
This points towards the underlying strengths of the Irish economy. With Ireland’s strong focus on innovation, digital transformation, a pro-business outlook and unemployment at record lows, Irish businesses are well positioned to weather the economic downturn that is ahead.
Mitigating economic risk
From engaging with leaders across many sectors of the economy, CEOs and CFOs are now actively considering ways in which they can manage costs while continuing to build a workforce that attracts the very best talent. Indeed, one-in-two senior business leaders say their company is currently experiencing difficulty in attracting and retaining talent.
With the increasing likelihood of a global recession, however, economic risk is becoming the driving factor in how Irish leaders will make business decisions in the near future.
To manage the impacts of these risks, half of the Irish businesses surveyed by Aon are considering cutting day-to-day spending to mitigate the impact of inflation on their finances, while one-in-three are considering reducing headcount to navigate the current economic climate.
Emerging risks are also affecting other areas of business, with just 18 per cent of business leaders willing to consider progressing with a merger or acquisition in the next two years due to rising inflation.
As many of these risks become more pressing, it is vital that business leaders focus on protecting their organisations’ resilience and finding growth opportunities in the face of heightened volatility.
Being prepared
To help Ireland’s C-Suite leaders navigate the new risks they face, our team at Aon Ireland has pinpointed four fundamental factors that will shape future success.
Embrace risk
First, embracing risk is now the only option open to Irish businesses. The most prepared leaders agree that their company’s appetite to address risk has increased in response to the current macroeconomic conditions. For companies to feel prepared heading into a possible recession, addressing risk isn’t a choice - but a necessity.
Listen to stakeholders
Second, Irish businesses must place ever greater emphasis on listening to their customers and people, as well as putting data at the heart of decision making. Our global research found that well-prepared leaders are nearly twice as likely to say that they value the counsel of an external advisor to improve their company’s ability to make good decisions and deal with risk. Confident leaders also resist the urge to slow hiring despite challenging economic conditions.
Understand risk
Third, Irish business leaders need to understand that risks are interconnected and can rapidly evolve. Our experience of the COVID-19 pandemic highlighted, above all, how a public health risk in one part of the world can transform into an unprecedented, global pandemic, which can fundamentally reshape how we live, work and do business. Irish leaders can take confidence in knowing that the pandemic has better prepared them to respond quickly to the unexpected.
Think long-term
Fourth, with one eye on the future, leaders need to remain focused on the long-term business opportunities and societal challenges that lie ahead. This requires continual investment in disruptive technologies and in combatting climate change. It’s clear from our global research that the most prepared leaders entering this period of economic uncertainty are still spending a greater amount of time considering climate change than those that are unprepared.
Making better decisions
As we look to the weeks and months ahead, and seek to manage growing volatility, it is crucial that business leaders reinforce their preparedness in the face of current and future risks affecting their organisations.
At Aon Ireland, our team of over 750 experts are helping to provide Irish businesses with clarity and confidence to make better decisions that protect their organisations and help them to unlock new growth opportunities in the months ahead.
Through our commercial risk, health, human capital and wealth solutions, we are here to support business leaders to cut through the complexity of the current economic landscape and focus on the decisions that will reinforce their organisations’ resilience and agility.
Whether it is embracing calculated risk-taking or seeking ways in which to continue attracting the very best talent, business leaders can mitigate the challenges that lie ahead while also creating new opportunities, helping their business to grow, and continuing to enrich the lives of their people and their customers.
This article is sponsored by Aon.