By Dan Fox, Aon’s Retail Practice Leader & Vince West, Head of Aon’s Business Resilience Practice.
A hugely dynamic sector, UK retail is enjoying sustained growth both in overall sales and share of wallet. In June, the Office for National Statistics reported a 27th consecutive month during which sales volumes had risen, while average weekly spends remain robust (£7.1bn) despite deflationary pressures in markets like food stores and petrol stations.
1. The digital era continues to change the competitive landscape within the retail sector. Retailers should focus on protecting their intangibles assets within the retail value chain such as data, brand value and reputation.
2. The emergence of big data presents opportunities and new risks for retailers, such as the threat of a data breach or extortion by cyber criminals.
3. The risk landscape is constantly evolving presenting new risks for retailers. Risk management will become high on the boardroom agenda with board members utilising risk management techniques to inform and support strategic decision making.
As a risk advisor to many of the UK’s biggest retail brands, Aon has supported dozens of household names as they grow and adapt, particularly as the risks inherent to retail – people, brand, technology, logistics, premises and product – develop and are in some cases superseded by emerging categories like big data and the threat of data breach or extortion by cyber criminals.
Dan Fox, Retail Practice Leader at Aon and Vince West, Head of the Business Resilience Practice at Aon, say that supporting retailers is about understanding and mitigating risk against two broad measurements.
“Fundamentally a risk is an event that has an upside and a downside i.e. could cause loss to a retailer,” says West. “We help customers understand their exposures to any potential event by ascertaining how likely they are to happen and what the impact (positive or negative) could be for their business if they occur.”
Fox adds that as retail adapts, this means a whole new set of potential risks for the industry to consider and measure. “At the simplest level, there’s now arguably less risk for some retailers as their shop networks shrink, but a greater aggregation as their warehouses grow and stock builds up in one place.”
Looking ahead, West says the industry is likely to change in three fundamental ways: “Boardrooms will increasingly utilise risk management techniques to inform their strategic decision making and companies will become much clearer in articulating their own risk appetite to reassure investors, customers and staff. Finally, we can expect increased use of ‘horizon scanning’ as a technique to try and identify emerging risks like big data, in the future.”
To understand how Aon’s risk management and insurance expertise could help your organisation identify and manage risks, contact Dan Fox, Aon’s retail practice leader, at email@example.com or Vince West, head of Aon’s business resilience practice, at firstname.lastname@example.org
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