Red Sea piracy and attacks are becoming a major headache for Irish business, pushing up costs significantly on imports from Asia as well as reducing certainty on access to supplies, according to a new report.
Aon, a leading global professional services firm, has published its Global Risk Management Survey. It is conducted every two years, and surveyed 2,842 respondents across 61 countries, including Ireland, and 16 industries to identify their most-pressing challenges.
Supply chain or distribution failure has risen to number three in the current risks facing companies in Ireland. Risks to the supply chain have come to the fore in recent weeks with the disruption to shipping in the Red Sea.
About 30 per cent of global container ship volume moves through the Suez Canal, which links the Red Sea with the Mediterranean Sea. The cost of shipping freight between Asia and Northern Europe has increased significantly in recent weeks as a result of diversions from the Red Sea.
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While cyber-attacks and data breaches tops the list of risks for businesses in Ireland, the shifting geopolitical and economic landscape globally is having a clear impact in Ireland, with business disruption and supply chain or disruption failure making up the top three risks facing companies across the country.
The disruption to supply chains linked to geopolitics and global conflicts has also been shown to be some of the most damaging for firms in Ireland, with 67 per cent of organisations suffering losses due to supply chain or distribution failure and 75 per cent because of commodity price risk/scarcity of materials.
Meanwhile, major cyber incidents are resulting in greater operational and financial damage, with successful attacks typically triggering a 9 per cent decrease in shareholder value for firms in the year after the attack, according to the 2023 Aon Cyber Resilience Report.
The vast majority of firms in Ireland (94 per cent) have a formal plan or are reviewing processes to mitigate against cyber risk, demonstrating that companies are acting proactively to protect and create business value.
The importance of addressing cyber risk is also clear at a global level where cyber risk is the top current and predicted future risk.
Rachael Ingle, CEO of Aon Ireland, said the world is “more volatile” with profound changes in trade, technology, weather and workforce issues impacting companies across Ireland.
“From cyber-attacks and geopolitical instability to low growth and a tight labour market, leaders in Ireland face an increasingly complex risk landscape,” she said.
“The report provides an important insight into the top risks facing firms in Ireland and the actions they’re taking to mitigate against their potential impact.”
With an exceptionally tight labour market creating significant challenges for businesses, failure to attract or retain top talent has risen eight places from the last survey in 2021 to number five in the top risks identified by businesses in Ireland.
Economic slowdown/slow recovery has fallen four places since 2021 to number six in the current risks facing Irish businesses, with inflationary pressures and high-interest rates creating economic and financing challenges for companies.
The risk posed by climate change has also risen significantly up the agenda for Irish firms – up 21 places to tenth in the top current risks facing Irish firms. When looking at future risk, climate change is ranked as the fourth most significant issue facing businesses.
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