Question: I am a newly appointed editor to a top journal. I have received my first manuscript assignment. I see in the journal system that the authors have provided preferences for reviewers for their paper.

I was wondering what is the norm like with respect to this. Do editors normally go by author's preference or do they ignore it? What factors should I take into account before considering author preference of reviewers?

On one hand this makes my task of searching appropriate reviewers easy but I suspect this might also give an unfair edge to the authors if the reviewers have some/any kind of bias.

Answer: 
I assume you're one new member of an established editorial board, with an Editor in Chief and other members of the board fully involved. Why not ask them what the convention is for this particular journal?
Be extra careful when following authors' suggestions for suitable peer reviewers. There has been a recent case of authors suggesting fabricated contacts as "reviewers", as described on <http://publicationethics.org/news/cope-statement-inappropriate-manipulation-peer-review-processes>. That case led some publishers to stop asking for reviewer suggestions explicitly within their submission processes.

Measures of caution that I find useful include:

* Only choose an author-suggested reviewer if you can verify independently that this person is suited as reviewer, ideally from your own prior knowledge.
* Don't use the contact address provided by the authors, but use a contact address that you can obtain independently, for example from the reviewer's university web page.
* Verify very carefully that there's no conflict of interests for that reviewer, for example joint publications, same affiliations also in the recent past, or similar.
* Don't make a decision if you only have reviews from author-suggested reviewers, but have at least one independently chosen reviewer.