Supply chains, inflation among key trends to watch: Aon
Aon says supply chain resilience, the myriad effects of inflation, the evolving nature of cyber risk and environmental, social and governance (ESG) issues are among key trends to watch.
Many companies are now willing to trade a proportion of their supply chain efficiency for greater certainty following recent events, and the trend is likely to continue, the company says in a Global Market Insights report.
ESG and climate concerns are also dominating risk agendas, and showcasing a diversity of thought, skill and background among corporate executive teams and boards has been viewed favourably by underwriters.
Aon says social inflation remains an issue in North America particularly while broader inflation is a global issue.
“Economic inflation brings into question the validity of policy limits and values which, in turn, casts a light on how claims can be assessed and adjusted,” it says. “In layered or quota share programs, economic inflation is likely to trigger the involvement of higher layer insurer participants in certain claims, potentially adding to the adjustment complexity.”
Aon says the prominence of long-term hybrid working, the rise in ransomware and widespread data breaches will drive cyber security investment. A skills shortage is expected to continue in the next three years, while criminals are employing new tools and techniques to bypass robust security measures.
Insurance will play an important role in providing assistance, and there’s been a marked shift in the cyber market, which has become more buyer friendly compared to earlier last year, the report says.
Aon Commercial Risk Solutions CEO Lambros Lambrou says globally key issues last year included the Russia and Ukraine war and surging inflation, and the economic landscape is likely to remain fragile for some time.
“These challenges, as well as others related to cyber, supply chain, food security, climate transition, energy security, ESG and public sentiment are likely to create new pressures on businesses over the medium to long term,” he says.
“Since these risk areas are evolving and highly interconnected – as we have seen firsthand with the geopolitical conflict – it is ever more vital that businesses commit to building resilience, including maintaining a well-informed, broad strategic approach to risk.”
