Aon's survey reveals 72% of business leaders feel unprepared for global megatrends and risks
Aon plc reveals that 72 percent of business leaders believe their companies are not adapting quickly enough to address risks linked to global megatrends such as trade, technology, weather, and workforce.
This finding is from its inaugural Business Decision Maker Survey. The survey, which included insights from C-suite and business executives in North America, the UK, and Europe, also found that 86 percent recognize the importance of tackling these challenges and opportunities.
However, growing complexity and volatility make decision-making increasingly difficult.
“These findings confirm what we’re hearing from our clients every day – the world is more volatile and complex, creating uncertainty and need for new solutions across our global economy,” said Aon CEO Greg Case.
“Business decision makers recognize the enormity of the challenges presented by the megatrends of trade, technology, weather, and workforce, and they are looking for actionable insights and innovative tools to more quickly address critical risk and people issues.”
The majority of survey respondents identified all four megatrends as extremely important to their organizations. Trade, technology, and workforce ranked as top priorities, with over 80 percent rating them as “extremely important,” while 70 percent rated weather as a top-priority risk.
Regarding trade, 74 percent of business leaders reported increased responsibility for supply chain or distribution functions over the past year, highlighting supply chain risks. Economic and financial concerns, such as exchange rate fluctuations and commodity price risk, were also top trade risks.
In technology, advancements in AI and data analytics offer competitive advantages but generate new risks. Sixty-three percent of leaders have measured the ROI of cybersecurity initiatives, and 61 percent have audited IT suppliers to manage third-party risks and IT sprawl.
Extreme weather and climate change impact business risks, with 66 percent of leaders recognizing the need for significant changes in how businesses address future climate risks. However, decision-makers are slower to act on weather risks compared to other megatrends.
Fifty-nine percent are quantifying the financial impact of extreme weather, while 72 percent are doing the same for cyber risks.
Workforce concerns include balancing costs with providing a compelling employee experience. Rising workforce costs pose a major challenge, with 57 percent of companies changing benefit or healthcare offerings to improve affordability.
Adjusting talent strategies for technological changes is a top workforce concern, with 52 percent of leaders reskilling or upskilling workers for green technology and renewable projects. Additionally, 45 percent believe climate issues help create a mission-driven culture that attracts and retains talent.
The survey also revealed differences in risk preparedness between organizations in the US and those in Europe and the UK. Forty-eight percent of US leaders cited supply chain disruption as a top trade risk, compared to 27 percent in the EU and UK.
Conversely, 44 percent of EU and UK leaders viewed war and political instability as a top trade risk, compared to 28 percent in the US regarding weather risks, 47 percent of EU and UK leaders prioritize decarbonization and clean energy, compared to 33 percent in the US.
US leaders focus more on workforce safety related to heatwaves (45 percent in the US, compared to 40 percent in the EU and UK) and property damage from natural disasters (37 percent in the US, compared to 33 percent in the EU and UK).
Aon’s survey also found that 77 percent of leaders are concerned about interest rate fluctuations, and 73 percent are concerned about asset price volatility impacting their business in the next year.
Eric Andersen, Aon president, emphasized, “It’s clear that without taking action, business decision makers will not be able to effectively manage their exposures to these megatrends over the next year.”
Confident business leaders benefit from effectively sizing and pricing risk exposures. Fifty-nine percent of leaders who are “very confident” have quantified the profit-and-loss of supply chain, cyber risk, and weather-related scenarios and events in the last year, compared to 36 percent of less confident leaders.
