Price of materials climbs into top five business risks

12 July 2013

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13 July 2013 | Will Green

The price of material inputs has entered the top five global risks in the Lloyd’s Risk Index.

The issue ranked seventh two years ago but has climbed to number four in this year’s survey of business leaders across the world. However, in the Asia Pacific region – a key manufacturing hub – material costs ranked as the number one risk.

Lloyd’s spokesman Matt Drage said: “It’s seen as a critical risk across the world.”

Higher taxation was identified as the biggest risk, followed by loss of customers and cancelled orders, and cyber risk.

Lloyd’s chief executive Richard Ward said: “With business tax in the spotlight and rising up the political agenda, executives are understandably concerned.

“Yet the danger is that an emphasis on near-term, operational issues comes at the expense of significant, strategic decisions that have previously exercised business leaders.

“With the timetable for global economic recovery likely to be much longer than we hoped, a focus on long-term sustainability and effective risk management should be a priority for boards across the world.”

Meanwhile, a separate survey called Insurance Banana Skins 2013 – covering risks faced by insurers – placed regulation at number one, followed by investment performance, macroeconomic environment, business practices and natural catastrophes.

Top five risks 2013:

1.     Taxation (up from 13th in 2011)

2.     Loss of customers/cancelled orders (down from 1st)

3.     Cyber risk (up from 12th)

4.     Price of material inputs (up from 7th)  

5.     Excessively strict regulation (up from 10th)

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