Corporate governance has continued its decline down the list of concerning risks for senior business leaders, according to AON's latest Risk Survey released this month.

Instead, business leaders and corporate clients of law firms are more concerned about reputation, cash-flow and human resources, with corporate governance coming in as the seventh highest risk concern in 2010/11, down four places from 2009/10.

Corporate Governance was the number one risk concern in 2006/07, the third in 2007/08, the second in 2009/09 and third again in 2009/10.

Paul Venning, Aon's national general manager told Lawyers Weekly that a more stable corporate governance regulatory environment has enabled organisations to better embed governance practices into their day-to-day operations processes.

"This provides organisations with confidence that they are successfully managing their potential risk exposures emanating from corporate governance non-compliance," he says.

Venning says that the lower level of concern regarding corporate governance risk is an indication that organisations are more aware of, and prepared, for governance concerns.

"A good example of this is that we saw corporate governance rank as the number one risk concern in 2005/06 and 2006/07 after significant changes to corporate governance were introduced under the Sarbanes-Oxley Act and ASX Corporate Governance Principles and Recommendations," says Venning. "Traditionally, we've seen risks that are difficult to manage and not easily transferred as some of the top ranked risk concerns. Concern develops from uncertainty and once a company is confident that they are adequately managing the risk, concern tends to decline."

But, adds Venning, such adequacy does not result in business leaders putting a halt to investing in and managing risk. "On the contrary it indicates that they have and will continue to do so," he says.

The Aon benchmarking study found that brand and reputation damage remained the most important risk concern for business leaders for the fourth year in a row, with the increased use of social media cited as particularly concerning for many organisations

Coca-Cola Amatil's general manager for treasury, risk and insurance, Michael Braude, cited social media as a big issue for organisations of his size.

"Someone could decide to use social media to make derogatory remarks about any number of elements associated with an organisation," he said in the report.

Liquidity and capital availability also featured strongly as a risk concern, rising six and seven places up the list respectively.

Meanwhile, "Legal" specific risks came in as the 11th concern in the 2010/11 report, down five places from 2009/10.

Venning believes that, like corporate governance, "legal" risks have slid down the list of concerns due to increasing attention being placed on capital availability and structure (up seven places from the previous year), liquidity and the impact of regulation.

Aon reports that the survey tracks the top 20 risk concerns based on 446 respondents from major Australian and New Zealand corporate and public sector organisations.

Aon's 2010/11 top 20 risk concerns for businesses and their change from the 2009/10 survey

1. Brand and image (0)
2. Liquidity (+6)
3. Human resources (+1)
4. Systems (-2)
5. Information management (+2)
6. Impact of regulation (+5)
7. Corporate governance (-4)
8. Market environment (+1)
9. Business interruption (-4)
10. Capital availability/Structure (+7)
11. Legal (-5)
12. Liability (+1)
13. Credit (+7)
14. Lack of innovation (-4)
15. Environmental impact (+4)
16. Market risk/Treasure (-4)
17. Physical assets (-2)
18. Natural disasters/Climate change (0)
19. Loss of intellectual property (-5)
20. Internal fraud (+1)

Aon's Australasian Risk Management Benchmarking Survey tracks the top-20 risk concerns based on 446 respondents from major Australian and New Zealand corporate and public sector organisations.