The increased security threat from cyber and data privacy breaches is the number one risk on the minds of executives in the transportation industry, according to a new report released today by Willis Towers Watson , the leading global advisory, broking and solutions company.
The comprehensive report, Willis Towers Watson’s 2016 Transportation Risk Index, was commissioned to measure the industry’s current risk environment as seen through the eyes of 350 of its senior executives from the air, land and sea sectors.
The findings of the Index, which includes the opinions of 110 CEOs and 80 CFOs, reveal a fluid risk landscape that is increasingly complex and interconnected. While proactive risk mitigation strategies remain central to corporate resilience, preparedness and response are now just as critical to a company’s performance.
“The transportation world is rapidly evolving, so risk strategies need to be responsive and dynamic,” said Mark Hue Williams, Head of Transportation Industry for Willis Towers Watson. “Regulation and technological advances are demanding new operating models while, simultaneously, hostile actors are mounting attacks to take advantage of the industry’s strategic role in the global economy. All of this is set against unstable geopolitical and economic backdrops and growing demand for new skills in the workplace. Knowing how these shifting forces should shape your risk strategy is critically important, and a great opportunity for those who lead the response.”
Index respondents were asked to rate 50 specific risks for their severity of impact and ease of risk management over a 10-year horizon and five broad categories, or megatrends:
- Geopolitical instability and regulatory uncertainty
- Complex operating models in an interconnected world
- Digital vulnerability and rapid technological advancement
- Talent management and the complexities of a global workforce
- Changing market dynamics and business model insecurity
The geopolitical megatrend is the highest-rated category of risk, highlighting the impact of world events on operations and, ultimately, corporate profitability. The actions of government, regulators and the judiciary – often taken in response to those events – were found to have a similar potential to be disruptive.
The single biggest individual threat across all modes of transport is the potential for cyber and data privacy breaches. There is no denying that the skillsets of the digital threat actors are growing, just as the transportation industry’s increased reliance on third-parties is multiplying the potential points of entry.
As supply chains – both digital and physical – become more connected, the Index reveals a growing recognition that risk resilience needs to be built at the community level. No company, no matter how diligent, is an island any longer.
In some cases, the research identifies common fears: for example, half of the top 10 individual risks are from the ‘digital’ megatrend. The hazards of complex operating models in an increasingly connected business environment also rate highly; dependence on third party suppliers and their potential to be the weak link in the digital supply chain both feature in the top 10 risks when responses from all modes of transport are aggregated.
However, stark differences in the perception of risk arise just as frequently as common themes: for example, four of the five regions surveyed perceive different primary risks, reflecting the importance of developing local solutions.
“Understanding your risks and knowing how to respond provides a competitive advantage, which is why we believe risk is a path to growth,” said Hue Williams. “We commissioned this Index to help our clients unlock potential.”