Business leaders around the world face growing complexity and volatility. Aon’s new Better Decision Maker Survey gathered insights from over 800 C-suite and business executives in North America, UK and Europe about four Megatrends across Trade, Technology, Weather and Workforce that are impacting businesses. Aon’s Global CEO of Commercial Risk Solutions, Joe Peiser, hosts a discussion about the insights derived from the survey with Aon experts Richard Waterer, global risk consulting leader; Spencer Lynch, global security consulting leader; Liz Henderson, global head of Climate Risk Advisory; and Lisa Patel, head of health and talent for EMEA.
Additional Resources:
2024 Business Decision Maker Survey
Special Edition: Aon’s 2024 Client Trends Report
Aon’s 2024 Client Trends Report
Tweetables:
Joe Peiser:
Hello everyone and welcome to a special episode of the On Aon podcast. My name is Joe Peiser and I'm the CEO of Commercial Risk at Aon. Today, we're discussing a new report that tells us what business leaders are currently thinking about risk. That report is the new Business Decision Maker Survey, which gathers insights from over 800 C-suite and business executives in North America, the UK and Europe, about their strategies and decision-making when it comes to tackling the risks and opportunities arising from four megatrends impacting organizations around the world: trade, technology, weather, and workforce.
The results make for some surprising reading. For example, we found that nearly three-quarters of respondents feel unprepared to address all four of the megatrends. Plus, the survey found that as risks grow more interconnected, leaders feel pressure to take on more responsibility, but at the same time, managing the challenges found within these trends, such as artificial intelligence and climate risk, is more and more difficult.
But there are some bright points. Of those leaders that feel confident in managing risk, 60 percent say that they have the data and analytics they need to address their challenges. On the other hand, among the less confident leaders, only 40 percent say they have the right data and analytics. So, the right data can make all the difference.
We asked Aon leaders who are subject matter experts in each of the four megatrends – trade, technology, weather, and workforce – to give us their thoughts on the findings. So first, when it comes to trade, business decision-makers say that risks linked to trade are some of their top concerns, both physical and financial. We asked Richard Waterer, Aon's global risk consulting leader, to weigh in on what the survey found about trade.
Richard Waterer:
So, I think businesses are more connected than ever before. They have a greater dependency on third parties, whether that's for ingredients or commodities or performing critical services or providing essential resources or transporting products. And I think when you overlay that with how volatile supply chains are today, so you look at major events that we've seen such as the conflict in Ukraine and disruption in the Red Sea, you look at the political instability that's underpinned by half the world's voters going to the polls in 2024 alongside an increasing tide of protectionism, and then there's the economic instability that comes with the ongoing uncertainty over interest rates and asset prices and liquidity, which I know was called out strongly in this report, I think that makes for a very volatile and risky environment for companies.
And the other thing I think that stood out from the report's findings was the lack of data and analytics that they often have to be able to truly understand the risk. And that has been a real challenge, particularly when you move into areas of exposure that aren't traditional and don't have the same volume of data available to them.
Joe Peiser:
And when it comes to technology, while advancements in artificial intelligence and data and analytics offer businesses a significant competitive edge, they also generate new and evolving risks. Here's Spencer Lynch, head of Aon Cyber Solutions in the UK, talking about the results of the survey.
Spencer Lynch:
It was over the past few years; we've seen a huge uptick in ransomware and other forms of cyber loss. And with advances in technology like AI driving even greater trends in digitalization, that's not going to go away anytime soon. It's going to continue to grow.
The good news that we see from the survey is that business decision-makers recognize the importance of assessing not just the potential positive impacts of embracing that change, but also understanding the risk that they face, with 72 percent of those surveyed saying that quantifying the profit and loss impacts are important and things that they're working on.
I think the other thing that I would say is when we look at what we've seen with the frequency of attacks continuing, albeit with the severity down slightly, that some businesses are looking at the risk impacts and saying, “oh, maybe the risk has been outsized historically and maybe we don't need to invest as much.” And the only reason that we're seeing the trend that we're seeing right now is because of the investment that's made over the past few years. I would urge decision makers not to take their foot off the pedal, off the accelerator.
Joe Peiser:
There's no doubt that extreme weather and a changing climate are impacting many of the risks businesses face today. Liz Henderson, Aon's global head of Climate Risk Advisory, has some thoughts about the business leaders we interviewed had to say about weather.
Liz Henderson:
The survey highlighted to me that weather is a risk that spans across multiple different trends and areas of risk that businesses are facing today. So, weather in and of itself is a driving force of physical property risks that an organization faces, supply chain impacts, food safety and commodity pricing that they might be relying or dependent on for their business profitability, health and human outcomes, as well as outcomes and impacts on employees. So, I think that weather is really starting to become a major player for organizations, or a major driver, for organizations across multiple assets or aspects of their business. However, it still seems to be a slower take up of companies that have weather as a key consideration for how they develop business strategies.
The survey found that while 59 percent of our clients are quantifying the impact of extreme weather and using that insight to make better decisions, that that number is lagging behind the 72 percent of our clients that are carrying out the same type of analysis for their cyber risks. So, there's a lot of opportunity for our clients to lean into really understanding how weather risk manifests itself throughout their business.
Joe Peiser:
And the last of the four client megatrends is workforce. Organizations are increasingly balancing costs with the ability to provide a compelling employee experience. Here's Lisa Patel, Aon's head of Health and Talent in EMEA to talk us through the survey's findings.
Lisa Patel:
I guess what came out of the report more than anything was just how difficult some of these decisions are to meet these challenges. Employers are having to make decisions on how to reskill, upskill employees in a way they haven't ever done before. So, they need complete changes, they need to do it quickly, they need to do it in a different way. So again, the focus in the report was around, particularly in EMEA, I should say, was around how employees might be rethinking their employee value proposition, so that becomes a top area of focus.
For me, the key to all of this is and how to make decisions will be using data to make the right decisions. It's new for lots of people. Employers and companies will be doing things in a different way and haven't necessarily used data in this way before. So, using data to make the right decisions.
Joe Peiser:
So, while there are significant challenges for business leaders today, there are also opportunities, and the right data and analytics may make all the difference in facing risks and making better decisions when it comes to managing those risks and making the most of the opportunities of the four client megatrends.
Thanks to the leaders that joined us today: Richard Waterer for trade, Spencer Lynch for technology, Liz Henderson for weather, and Lisa Patel for workforce. And be sure to check out the full Business Decision-Makers Survey linked in the show notes. That's our show for today. Thank you all for listening. Until next time.