In face of growing impacts and risks caused by climate change, as well as rising population projections, the food, agribusiness and beverage industry has to innovate to ensure it’s addressing these emerging challenges.
To help understand the work that Aon is doing to help clients in the global food, agribusiness, and beverage industry make better decisions and address new risks, host Shelly Brown, Aon's Diversity Solutions leader, is joined by Ciara Jackson, food, agribusiness and beverage enterprise client leader. Together they examine the impact that supply chains, inflation, climate change, the COVID-19 pandemic and a host of other factors have on this industry.
Additional Resources:
Industry Insights Food, Agribusiness and Beverage
Inflation’s Impact: A Closer Look at Three Industries
Q2 2022 Global Market Insights Report
Aon Insights: Food, Agribusiness and Beverage
The Aon One Brief: Beyond Logistics: Product Recall Risks and How to Avoid Them
Tweetables:
Voiceover:
Welcome to “On Aon,” a podcast featuring conversations between colleagues on, well, Aon. This week, we hear from Ciara Jackson about the Food, Agribusiness, and Beverage Industry. And now, this week’s host, Shelly Brown.
Shelly Brown:
Hello, my name is Shelly Brown, and I am the Diversity Solutions Leader for Aon. My team looks after Aon's commitment and partnerships with small and diverse businesses. I've been with the firm coming up on six years, and I am delighted to have some time with you today and share a little bit about Aon's food and agribusiness and beverage industry vertical. Joining me today is my colleague Ciara Jackson, who has been with Aon since 2015. And currently serves as an enterprise client leader in our EMEA team, focused on the food and beverage industry. So, Ciara has some very insightful information to share a little bit about today with us. She will talk through global food and drink industry businesses. She's also going to share a little bit about her background. She's gotten some experience in finance, business consulting, advisory and operations. And outside of work. She's an enthusiastic consumer of the fantastic products in the industry. I'd love to hear a little bit more about that. Thanks for being here today Ciara, and welcome to the On Aon podcast.
Ciara Jackson:
Thanks, Shelly. I am absolutely delighted to be here to talk all things, food, and ag with you. And I guess I just love the diversity that this industry offers us and it's at such a point of inflection. So, the world population is forecast to be 10 billion by 2050. And the industry is in the process of having to fundamentally transform to change food production systems and to increase productivity at the same time; changing practices to become more planet-friendly and more sustainable. So, it's a fantastic industry to work in.
Shelly Brown:
Okay, 10 billion people. And I heard something recently that we are right at 8 billion or maybe just past 8 billion today. So, 10 billion by 2050. Wow. That's a lot of consumers to touch. I'd definitely love to hear a little bit about the industry, food, agribusiness and beverage. Would you share a little bit more about your work in this industry and the work here at the firm?
Ciara Jackson:
Well, I guess if we start with the hypothesis that we think it's just so important that we understand the dynamics of the industry that our clients operate in. Because that allows us to really pointedly advise them on the risk challenges. And it's not just the food and agribusiness industry, but we actually go to a deeper level than that. So, we know, for example, that beverage manufacturers are hugely concerned about counter fishing. And we know that dairy processes are hugely concerned about the impact of alternative proteins. So, no two conversations are the same, there's huge diversity in the industry. So, we've established a strong global team with regional hubs around the world. And all of these teams have a whole variety of risk expertise, everything from human capital to intellectual property, to cyber, to risk financing. But the one thing in common, all of these colleagues have is they provide that advice to our clients through food and drink industry lands. So, the example I often use is cyber and how that manifests in this industry versus, for example, healthcare. So, in healthcare, it's all around protecting patient confidentiality but in this industry, it's all about supply chains. So, this industry is being targeted by ransomware attackers at the moment. And the reason that they're doing that is they can shut down supply chains and stop product arriving to customers and retailers on time.
Shelly Brown:
Ciara, thank you for sharing that. The dynamic of supply chain risk continues to show itself in so many industries, in so many instances. And when you were sharing, it made me think a little about not only supply chain, but maybe share a little bit about the impact of inflation. Maybe share a little bit about the dynamics of climate change as we think through those challenges and opportunities for our clients and the consumers they serve.
Ciara Jackson:
Yeah. I guess this is an industry that's experienced in dealing with volatility and change. However, at the moment, I think so many macro events are colliding to really challenge how the industry is thinking. So, with everything from pandemic to digitalization, to supply chain, to climate, to weather, to lack of human capital, it's really complex and really, really, really challenging. And as I said, for this industry probably the most important thing our clients think about is getting products safely to their customers on time. And if you think about the variety of things that can disrupt that while trying to run a business on a day-to-day basis, it's really, really challenging.
We talk to our clients a lot about operational resilience, making sure their systems and their processes, and their structures are as strong as they can be to prevent disruption. But at the moment, inflation is just a huge challenge. So, it's inflation on commodity prices. They're incredibly volatile. Wheat, dairy, soy, you name it, they're volatile. We're also seeing inflation on packaging. We're seeing inflation on transport and logistics. There's shortages of lorry drivers, there's shortages of warehouse spaces in some territories and there's shortages of people. So, this inflationary impact is really, really severe and really, really, I guess challenging the industry. And I guess with the pandemic and the more focus on food security, lots of our clients are getting incredibly concerned about security of supply and affordability of that supply as well.
Shelly Brown:
Ciara, thank you for that. So, much data coming at us, whether online or through a different newscast or even watching the financial markets around the areas you just touched on. What do you think the industry in the aggregate is doing to respond or adjust for those influencing factors to their business? And then maybe share a little bit about the role we play as a firm in helping our clients make better decisions.
Ciara Jackson:
I would say that in all our client conversations, Shelly, the thing that has propelled itself up the agenda most as an emerging risk is the whole topic of ESG or environment, social and governance, and climate change and sustainability, and they're all interconnected. So, our clients are, as I said, are concerned about this security of supply. So, what we're seeing innovative leaders in the industry doing is they're locking in longer-term off-take agreements. And they're using partners who have expertise in science and technology in R&D to implement more sustainable practices across the supply chain. So, there's definitely better collaboration and more longer-term commitments being made across the supply chain through climate change and concerns around that. Emissions are a huge challenge. So, right now we're working with a small group of clients to co-create around how we can think about helping them to understand the impact of transition risk in this industry.
So, the farmers, the growers, the fisher people, they need to change their farming practices at the bottom of the supply chain. And there's risk inherent in that. And there's cost in doing that. And we are trying to figure out how we can quantify that and how we can help them mitigate and transfer that risk. And most importantly, for our clients who are listed companies, we've lots of sophisticated risk financing techniques that we can use to help them smooth the volatility of that cost over a medium-term period. So, one example of that is what we're calling our “green captive,” which is an innovation born in Aon if you like. And that's where we use an existing captive structure, far more strategically to enable and support a corporate ESG agenda. So, there are some concerns in the industry that the cost of climate is not necessarily priced into existing insurance program structures. So, we're helping clients think about how they could fund for potential future climate losses. We're helping them model scenarios around climate, where there's likelihood to be more severe climate events. We're helping them to a risk control and engineering capability put better mitigates and defenses in place. And I guess we're giving them the data to inform the decisions that they need to make. And these are our big decisions where external stakeholders particularly, regulators, investors and consumers are just studying all of this very, very carefully.
Shelly Brown:
Wow. Okay. So, a couple of things caught my ear and I'd love for you to share a little bit more, go a little wider and deeper on the dynamic. I think you called it transformational risk. Love to understand what's in that term and different dynamics of the role we play at Aon to help our clients work through transformational risk. Maybe focus on the dynamic of environment within the ESG discussion.
Ciara Jackson:
For sure. And this is actually one of the favorite parts of my job, where we're trying to problem-solve collaboratively across all the different capabilities that we have at Aon, Shelly. And it goes back really to the burning platform that we talked about at the start of this podcast around world population growing. Because within the existing population and the existing food systems, we already have challenges. So, we have about a third of the world's population at the moment that are malnourished or don't have enough to eat. And then at the other end of the spectrum, we have a whole cohort who are over nourished that have things like heart disease, obesity, et cetera, that are putting huge challenges on our health systems. So, we already have that. Now the food industry needs to find a way to produce more food but in a more sustainable way that leads to better outcomes for the planet and for the people who live in the planet.
So, I think as people in business, in collaboration with our communities and our wider world, we have a responsibility to leave the planet in a better place than how we found it, quite frankly. So, how is that going happen? Well, it needs to happen at farm level and that's called the climate transition. So, farmers need to change their practices. So, for example, if you change the mix of feed that you give to a cow, you can potentially reduce meat [inaudible 00:11:11], for example. There's also a lot of technology being applied to this. So, a combination of science and technology are helping the industry understand how to do this transition. And where Aon has a big role to play is in co-creating across the supply chain, to understand what the risk inherent in this process is and to quantify it. And then to look at how we can help transfer some of that risk for our clients or maybe share the risk to help solve this big challenge.
Shelly Brown:
Oh, Ciara, thank you so much. Really appreciate the insight. As a consumer at the end of the supply chain, I really appreciate you sharing because I didn't think of some of these dynamics. You go to the store, you grab the product off the shelf, you take it home and you use it for your family. But the dynamics you shared were very insightful and to the things that we're challenged with today and the solutions that we're working through with our clients and their work in the future. One thing before we go, I'd love to ask a couple of questions of you. So, feel free to share a little bit about what excites you most about Aon's future.
Ciara Jackson:
Ooh, that's a fabulous question. When you look at the risk research that we do and our Global Risk Management Survey that we conduct every two years, where we survey almost 3000 of our largest clients around the world. We ask them to think about 60 risks. And for me what's really interesting is that about one third of them are insurable or can be transferred. About one third are somewhat insurable and about one third, there's no existing insurance product for. So, we've this mismatch between risk and these risks that are uninsurable have the potential to cause really big financial and reputational damage. And yet there's no obvious solution there for them and no capital to support them. So, at Aon, we talk about unmet needs, and we talk about matching risk to capital. So, that's what's really exciting about the role that I have at Aon. We have lots of colleagues, lots of different areas of expertise, whether that's client leadership, risk financing, human capital, you name it. And we all come together. We collaborate across geographies, across solution lines, across areas of expertise. And what we have in common is that we're all working together to try and solve this immense challenge that our clients are facing and to work with our clients together to try and solve for this. And that really, really excites me.
Shelly Brown:
Nice. Thank you for that. Help me and our audience know Ciara Jackson a little bit better. What's a hidden skill or a hidden talent of yours that we would not find on your resume or your LinkedIn profile?
Ciara Jackson:
Well, as you can probably tell from my accent, Shelly, I'm Irish. I live in Ireland. So, my hidden skill is that I am a Gaelic football coach for my daughter's under 14 and under 16 teams.
Shelly Brown:
Okay. So, Gaelic football coach. And I've never heard of that before. Share a little bit about Gaelic football. Love to understand this a little bit better.
Ciara Jackson:
So, Gaelic football is an Irish sport and it's a combination of what folks in the U.S. would call soccer and Australian rules football. So, every tiny village in Ireland will have a Gaelic football club and all children in Ireland grow up, it's almost like a rite of passage playing Gaelic football. So, I coach my children's football teams.
Voiceover:
This has been a conversation “On Aon” and Aon’s work with the Food, Agribusiness and Beverage industry. Thank you for listening. If you enjoyed this week’s episode, tune in in two weeks for a new episode around wellbeing. To learn more about Aon, its colleagues, solutions and news, check out our show notes, and visit our website at Aon dot com.