Natural disasters are increasing in frequency and severity. Aon’s 2021 Weather, Climate and Catastrophe Insight Report evaluated how these disruptive events are resulting in global economic losses and outlined how leaders can address and assess these risks.To walk us through what businesses can do to build resilience and prepare for the inevitable impact of catastrophes, Aon’s President, Eric Andersen, has a discussion with host Alexandra Lewis about how Aon is working to protect and enrich lives around the world against the threats of extreme weather and natural catastrophes. They discuss Aon’s work to mitigate the impact of catastrophic events and the key findings from Aon’s 2021 Weather, Climate and Catastrophe Insight Report.
Natural disasters are increasing in frequency and severity. Aon’s 2021 Weather, Climate and Catastrophe Insight Report evaluated how these disruptive events are resulting in global economic losses and outlined how leaders can address and assess these risks.To walk us through what businesses can do to build resilience and prepare for the inevitable impact of catastrophes, Aon’s President, Eric Andersen, has a discussion with host Alexandra Lewis about how Aon is working to protect and enrich lives around the world against the threats of extreme weather and natural catastrophes. They discuss Aon’s work to mitigate the impact of catastrophic events and the key findings from Aon’s 2021 Weather, Climate and Catastrophe Insight Report.
Additional Resources:
Climate Change is Also Having an Impact on Everyday Health and Wellbeing - The One Brief
Aon’s 2021 Weather, Climate and Catastrophe Insight Report
Ep 10: On Aon's Analysis of Climate and Catastrophic Events with Meteorologist Steve Bowen
Employment Opportunities at Aon
Tweetables:
“People tend to downplay the risk or the significance of natural disasters and climate issues.” — Eric Andersen
“The goal with a report like this is to give our clients information that they can act on.” — Eric Andersen
“Clients are looking to us to help them think through how to manage all the aspects of climate risk or any real impact to their business.” — Eric Andersen
Voiceover:
Welcome to “On Aon,” a podcast featuring conversations between colleagues on, well, Aon. This week, we hear from President of Aon, Eric Andersen about Aon’s 2021 Weather, Climate and Catastrophe Insight report. And now, this week’s host, Alexandra Lewis.
Alexandra Lewis:
Climate is one of the hottest topics of the day. We all know that a change in climate is impacting every aspect of our lives from protecting our property through to supply chain disruption and health implications. So what can businesses do to build resilience? My name's Alex Lewis and I have been a colleague at Aon for 17 glorious years now. And I'm absolutely delighted to be here today with Eric Andersen, Aon's President to explore how we can protect and enrich lives around the world against a threat of extreme weather. And this is really important because we're already beginning to see the impacts of climate change, the events such as Hurricane Ida, the European and China floods and wildfires across the world. So Eric, welcome.
Eric Andersen:
Thanks, Alex. It's great to be here and really excited to be talking about this topical and interesting topic at the moment.
Alexandra Lewis:
Excellent. And so, Eric, throughout your career, you would have experienced so many different catastrophic events where you've been helping clients to respond and then rebuild their lives. Which ones have really stood out for you?
Eric Andersen:
Well, I think the one that stands out for me immediately is Hurricane Sandy, because having been in lower Manhattan at the time and watching the aftermath of not only how you have to deal with the physical damage to buildings and cars and subways and all the things that happened to lower New York, you actually realize the significance that it has on people. It was the first time we had to do something that we all know so well now called remote working and finding alternative space. And the technology, obviously wasn't what it is today. But you really got to witness up close the displacement and what it does to people, what it does to businesses, and then watching over that time, those small businesses that frankly never came back to lower Manhattan, that didn't have the right protection in place, were not ready for that kind of a disaster, to see the impact on not just the business, but the local community around it. We talk a lot about it, we give advice on it, we help people protect, but we lived through that one ourselves and learned a lot in the process.
Alexandra Lewis:
That's really interesting insight. Thank you. And it's so true. It's not just thinking about that impact on property, but bringing it back to people's lives and their livelihoods, which is so incredibly important. And of course, as we try and mitigate the impact of such catastrophic events in the future, what is so important is how do we understand more about them in the first place. And of course, this is where data is so important. And the good news is that this is where our Weather, Climate and Catastrophe report comes in because we have an abundance of data. And before we perhaps delve into some of those findings, Eric, can you just tell us a little bit more around how can this report actually help clients?
Eric Andersen:
I have found over the years that people tend to downplay the risk or the significance of events like natural disasters and climate issues. It just, it's not on the top of mind every day. And so they're always a little bit surprised when it happens or it happens or they're affected by it. And so the significance of it, I think, is such an important part of what we're trying to do with this report outlining the size of them, the scope, the frequency, all the different aspects of it.
Eric Andersen:
But it also, I think helps them understand it and helps them prepare for it because ultimately the goal with any kind of a report like this is to give our clients information that they can act on and also think through, not just the physical damage part, which is obviously the thing you see on TV, but really what we're talking about before, the impact on the business that's not necessarily property related, whether it's colleague impact, whether it's supply chain impact. The interconnectedness of business today really does drive so much risk that people today don't understand. And so trying to outline a little bit of it in the report, I think lets people understand it and then hopefully do take some steps to prepare for.
Alexandra Lewis:
Fantastic. And that's what it's all about, becoming more resilient. So delving into the report itself, were there any facts that you found particularly surprising or really stood out for you?
Eric Andersen:
I have to say it's the size, right? People see them as individual events, but when you actually step back even over one calendar year and you look at the size of the economic losses, $343 billion of losses in one calendar year globally. You've got events that have happened in the US, certainly Hurricane Ida. You've got the flooding in Europe. You've got wildfires in Australia, earthquakes in Japan. So it's really a global phenomenon.
Eric Andersen:
But also, I think part of it is it shows the amount of loss that is actually not protected or insured by the insurance industry. We call it the protection gap, which is essentially the amount of insurance against the total economic loss. And even in those locations where I was just mentioning, Europe, the United States, Japan, all highly developed areas, you still see a significant amount of loss that is actually not protected by insurance, which tells me at least that we have something called an innovation gap, which is we're not providing enough innovative products to help people actually manage against these disasters, which by the way happen every year. So 2021 felt like a very significant year and it was, but it was not the worst year we've ever had in this century. And so it happens with rising frequency, but at the same time, people still are not prepared for it. And I think the industry is not doing enough to help people prepare for it.
Alexandra Lewis:
So of course, as Aon, we have a huge opportunity to help provide some of those solutions, but what can businesses themselves do to help and invest to protect themselves going forward?
Eric Andersen:
What we're helping our clients do right now is really think about it in terms of resilience. So if it's property risk, it's location of buildings, it's reinforcement of buildings against climate experience. It's essentially investing in their infrastructure to make sure it can withstand whatever peril they're facing, whether they're a manufacturing plant, hotel, office, whatever it is, where it's located, because it's different risk depending on where you are physically. And then we're also helping them think through the supply chain risk because it's not just their own buildings. It's not just their own talent or teams, but it's their vendors and suppliers and people that they trade with. So they've got to think about it more holistically. That's the physical side.
Eric Andersen:
I also think the work around talent and how they manage their teams and how they help them through these events is such a significant part of getting a business back to where it was before the event that the leaders of these firms now need to step back and really look at it from a physical standpoint, from a supply chain standpointand from a talent standpoint. And Aon is well-positioned to have those conversations and really help our clients think through that in a more holistic way.
Alexandra Lewis:
You're right. It's an incredibly exciting time. Whether you're a risk manager, a chief HR officer, a CFO, for example, and then across the insurance industry as well, we all play such a very important part. And it's interesting how you mention that focus on talent, because it's so true as our world evolves so do our skillsets at the same time. So as Aon starts to crack down and explore these new solutions about helping clients, where do you think we go from here? What's next on our innovation agenda?
Eric Andersen:
The conversations that I've been having with our clients really outlines exactly what you just said. They're looking for us to help them think through how to manage all the aspects of climate risk or any other real impact to a particular business. Because I think the pandemic has certainly shown that you can't just solve for the business. You have to solve for the colleagues that are in the business, the supply chain, all the different aspects that we've been witnessing over the last two years.
Eric Andersen:
And what's exciting about it for Aon is that we're in all of those key areas. And so our ability to help clients with data and analytics and real facts around what's happening, but also strategies on how to mitigate either the risk itself from a property standpoint or how to manage through their talent issues in a moment of dislocation, I think is a key area and it's an area we've been building for years. And so as I pick up the newspaper in the morning, you can't help but read about some natural disaster or some impact of climate on either a society or a business or an individual. And our focus is in those key areas. And so it's exciting for us to be able to help our clients as they are now thinking through those issues as top of mind from a leadership standpoint.
Alexandra Lewis:
And talking about talent, if someone's out there at the moment, listening and thinking, wow, Aon sounds such a great place to work at. How can I come and be part of these solutions? What are some of the tips that you would give them?
Eric Andersen:
Well, first of all, I would agree with you. I think Aon is a great place to come work at. And if you're interested in these topics, it is an area of focus for the firm. And I've been at the firm for 25 years, so I've made my career here and I've enjoyed the diversity of thinking, the ability to work with clients on real substantial, meaningful topics that are top of mind for them.
Eric Andersen:
And so when I talk to new recruits who are looking at our industry as a career and Aon in particular, I always share the same comments about, you need to be curious. You need to be intellectually curious about what's happening in our world today, what's happening at clients, understanding all the capabilities that we have to help them. And I find that those that are the most successful have that real inbred curiosity to be able to try and solve problems for clients. And I think our goal is to provide the tools, to allow people, to use that insight, that data, to be able to work with each client who they're all different. And they all look to us for different answers in different ways. Our team spends a lot of time understanding the client, understanding the issues, and then how you apply the skills and capabilities that we have to help them through their challenges.
Alexandra Lewis:
And I love that point around curiosity because I think that applies to when you're having a conversation with a colleague or even when you're speaking to your clients to really delve deep and understand what are their challenges and what are those opportunities ahead. So Eric, when you're not busy trying to mitigate the impact of catastrophes around the world, what do you like doing in your spare time?
Eric Andersen:
Well, that's a great question. Well, I have five children, so I spend a lot of time chasing them around at all different ages. And so really do enjoy spending time with my family. I'm a reader. Honestly, there's not a whole lot of spare time these days, but when I'm not working, I like to spend as much of it as I can with my family.
Alexandra Lewis:
That sounds absolutely wonderful and very well deserved. Eric, thank you so much for joining us today to talk a little bit more around how Aon is helping to mitigate those impacts of climate change and catastrophes.
Eric Andersen:
Thanks, Alex. It was a pleasure to be here.
Voiceover:
This has been a conversation “On Aon” and Aon’s 2021 Weather, Climate and Catastrophe Insight Report. Thank you for listening. If you enjoyed this week’s episode, tune in in two weeks for a conversation with the 2021 LPGA Aon Risk Reward Challenge winner. To learn more about Aon, its colleagues, solutions and news, check out our show notes, and visit our website at Aon dot com.