- “Geopolitical volatility” is among the top five current and future risks, highlighting the growing instability in the region.
- 83% of businesses report an increase in insurable risk costs as cyber tops the risk list
Japan’s main risks:
“Cyber attacks/data breaches” remain the top risk for Japanese businesses, in line with global trends. “Supply chain or distribution failure” comes in second, as extreme weather events and increasing geopolitical volatility, including changing trade policies, force companies to reassess their supply chains. Additionally, “product liability/recalls” and “exchange rate fluctuation” pose significant risks, reflecting the strength of the country’s manufacturing industry and its exposure to global market volatility. Notably, 63.6 percent of Japanese respondents reported losses due to product liability or recall issues and 47.6 percent cited losses due to exchange rate fluctuations.
Tatsuya Yamamoto, CEO of Japan at Aon, said: “Japanese organizations operate in an environment of unprecedented complexity. Cyber, weather and geopolitical risks continue to pose major challenges for Japanese businesses, highlighting the need for robust risk management frameworks and agile strategies. As market trends change and competition intensifies, vigilance and adaptability will be essential. Risk interdependence – where a cyber attack can disrupt chains supply chain or where geopolitical volatility demands regulatory changes – a holistic and proactive approach to resilience.”
- Cyberattacks/data breaches
- Supply chain or distribution failure
- Weather/Natural Disasters
- Geopolitical volatility
- Business interruption
- Economic slowdown/slow recovery
- Exchange rate fluctuation
- Raw material price risk/material shortage
- Product Liability/Recall
- Inability to attract or retain top talent
Risk management: formalization and focus on insurable risks
Japanese organizations demonstrate a strong commitment to risk management, with 74.7% having a formal risk management and assurance department, compared to 68.4% globally. Additionally, 75.3 percent measure the total cost of insurable risk and 83.3 percent report that these costs are increasing. Even as risk awareness increases, most organizations still need to quantify their exposures or leverage advanced analytics.
Risk management assessments of Japanese companies for the top three risks
- 27.2 percent assessed the risk
- 12.6 percent have developed continuity plans
- 22.3 percent have risk management plans
- 25 percent assessed the risk
- 20 percent have developed continuity plans
- 26.7 percent have risk management plans
- 24.1 percent assessed the risk
- 22.4 percent have developed continuity plans
- 13.8 percent have risk management plans
Future risks: rapidly changing market trends and geopolitical volatility
Looking ahead, Japanese organizations expect “weather/natural disasters” and “geopolitical volatility” to remain critical risks, alongside “rapidly changing market trends”, which are more important in Japan than globally. This highlights the country’s exposure to climate events and changing consumer preferences.
- Cyberattacks/data breaches
- Weather/Natural Disasters
- Geopolitical volatility
- Rapidly Changing Market Trends
- Growing competition
Shinichi Kandatsu, head of business risk solutions for Japan at Aon, said: “Cyber and weather-related risks continue to top the rankings of top concerns for Japanese companies today and in the future, with geopolitical volatility also ranking among the top five risks in both periods. This trend reflects the growing instability in the region, with implications for supply chains, regulatory environments and financial performance. In the rapidly changing market Today, leveraging advanced data analytics is essential for businesses to anticipate emerging risks, optimize risk capital and build resilience. Results from Aon’s Global Risk Management Survey provide actionable insights for Japanese companies to benchmark their risk strategies and identify areas for improvement.
Aon plc (NYSE:AON) exists to shape decisions for the better – to protect and enrich the lives of people everywhere. With actionable analytical insights, global venture and human capital expertise, and locally relevant solutions, our colleagues provide our clients in more than 120 countries with the clarity and confidence to make better risk and people decisions that help protect and grow their businesses.
Jini Pillai
Communications Manager, APAC, Aon
(email protected)
+65 8133 8523
Disclaimer
The information contained herein is for informational purposes only, and is not intended to address the situation of any particular person or entity. Although Aon endeavors to provide accurate and current information and uses sources it considers reliable, the company does not guarantee, represent or warrant the accuracy, adequacy, completeness or fitness for any purpose of the contents of this document and cannot accept liability for any loss suffered in any way by any person who may rely on it. There can be no guarantee that the information contained herein will remain accurate as of the date received or will continue to be accurate in the future. No person or entity should make decisions or act solely on the basis of the information contained herein without appropriate professional advice and targeted research.