Toronto’s drive to shore up its reputation as leading international business hub was bolstered Monday after a new study hailed it as the most desirable city in the world for companies to recruit, hire and transfer employees.

Aon Consulting's People Risk Index compared 90 global cities on demographics, education, employment practices and government regulations.

Toronto was ranked the “lowest risk city” in the world for employers, ahead of rivals New York, Singapore, London and Montreal. Even so, the study suggested Toronto still has much “room for improvement” on the talent front.

Both Toronto and Montreal fared well because of Canada’s low level of corruption, its focus on equal opportunity legislation along with health and retirement benefits, the study said.

The highest-risk cities for companies, meanwhile, include as Dhaka, Bangladesh; Phnom Penh, Cambodia; Lagos, Nigeria; Karachi, Pakistan; and Tehran, Iran.

“Cities with low risk typically have a government that is transparent, non-confrontational, and deal with employment issues fairly,” said Rick Payne, chief research officer of Aon Consulting's Global Research Centre in a release.

While Toronto came out on top, the study argues it remains at a disadvantage because of its relatively small population and undersized talent pool compared with U.S. cities like New York or Los Angeles.

That shortcoming “increases the risk of recruiting for certain types of jobs such as highly specialized financial jobs and design/visual arts jobs,” Payne said.

Meanwhile, both Toronto and Montreal are grappling with aging workforces, the report noted.

Those critical observations come at a time when Toronto is furiously marketing itself as a global financial services hub.

Toronto ranked 12th in the latest Global Financial Centres Index and all levels of government are anxious for it to crack the top 10 by 2015.

Nonetheless, some recruitment firms, such as Toronto-based Watson Gardner Brown, have warned the industry is facing a serious skills shortage — especially in the areas of risk management and compliance.

Janet Ecker, president of the Toronto Financial Services Alliance, said Toronto’s new “global hub strategy” will focus on filling identified gaps, while attracting more business to the city.

“We’ve got talent. It is one of the reasons that we’ve ranked as high as we have on things like the Global Financial Centres Index,” Ecker said. “But no one is resting on their laurels.”

Earlier this month, the federal and provincial governments announced plans for a Global Risk Institute in Financial Services in Toronto as part of the global hub strategy.

The move followed a 2009 report outlining a preliminary plan for the sector to create up to 40,000 direct and indirect jobs over five years.