The Retailer Spring Edition 2022

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Elsewhere on Aon’s top ten retail risks, com modity price risks/scarcity of materials also features and is predicted to be in the top five future risks. Surprisinglyworkforce issues don’t appear in the top ten even though a possible consequence of the pandemic is a more fluid and less loyal workforce than before which could store up future staffing issues. We saw some signs of this with HGV drivers being brought into an increasingly competitivemarket for services owing to a shortage of qualified workers and retailers need to fulfil customer orders. Any sign of ESG? Another big risk area that doesn’t feature explic itly in the top ten is ESG (environmental, social and governance). This is probably a function of where the retail segment is now; retailers are having to prioritise more operational risks, and they’re still focused on that need to reset strategy post-pandemic and how they look to move forwards. It’s also evident that many will see ESG as implicit within other risks like supply chain and meeting customer needs, rather than as a separate area, as well as recognition that many retailers are already doing more around issues like sustainability and their impact on their communities.

Safeguard the brand Sitting behind almost all these risks is the threat to a retailer’s brand and reputation. Retailers list the risk as fourth in their top ten which is no surprise given it can be damaged almost at any point in the product journey, whether it’s a hack leading to the paralysis of an automated fulfilment centre; the use of unethical labour practices in the supply chain; or a faulty product sold to a customer. Damage to brand or reputation is a complex risk to protect against and is why retailers will need to reassess all the risks they face as their business strategy changes. Thiswill enable them to make better decisions on how to manage those risks, whether through mitigation and/or risk financing, and ensure that none have the ability to ultimately damage and devalue their brand, and derail their new strategy as they negotiate this fast-changing retail environment. Now is the time for businesses to reassess risk management practices and controls to ensure the business is resilient and informed to make better decisions. For more information on the issues discussed in this article, please contact Dan Fox.

Retail industry’s top ten risks 1 Supply Chain or Distribution Failure 2 Cyber Attacks/Data Breach 3 Business Interruption 4 Damage to Reputation/Brand 5 Failure to Innovate/Meet Customer Needs 6 Economic Slowdown/Slow Recovery 7 Increasing Competition 8 Pandemic Risk/Health Crises 9 Commodity Price Risk/Scarcity of materials 10 Accelerated Rates of Change in Market Factors Retail industry’s top five future risks 1 Cyber Attacks/Data Breach 2 Failure to Innovate/Meet Customer Needs 3 Accelerated Rates of Change in Market Factors 4 Commodity Price Risk/Scarcity of materials 5 Increasing Competition

Dan Fox 07769 742803 dan.fox@aon.co.uk

Whilst care has been taken in the production of this article and the information contained within it has been obtained from sources that Aon UK Limited believes to be reliable, Aon UK Limited does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the article or any part of it and can accept no liability for any loss incurred in any way whatsoever by any person who may rely on it. In any case any recipient shall be entirely responsible for the use to which it puts this article. This article has been compiled using information available to us up to 30/03/22.