How Four Megatrends are Driving Strategic Business Priorities Around the World

November 8, 2023 5 mins

How Four Megatrends are Driving Strategic Business Priorities Around the World

At our recent Aon Insights Series Pacific, Eric Andersen, president of Aon, and Lambros Lambrou, CEO of Human Capital for Aon, shared insights to help clients manage their interconnected and complex risk and people issues.

In an ever-changing world, business leaders are finding it harder and harder to make the right decisions. The pace of change, and the interconnected nature of the challenges businesses face, mean that businesses are making strategic, well-informed decisions — and sometimes at the drop of a hat.

“The one consistent theme I’m hearing from conversations with clients around the world is that managing business is getting increasingly complex,” Eric shared. “Not just on the risk side of their firm’s operations, but on the people side as well.”

The Megatrends Driving Business Complexity

This volatility and complexity is being driven by a series of profound changes in the global economy. Aon’s 2024 Client Trends Report, takes a deep dive into the key challenges businesses are grappling with and reveals that many are driven by significant shifts across four key areas – Trade, Technology, Weather and Workforce. By exploring new ways to address the challenges and opportunities presented by these “megatrends,” businesses need to consider how their risk and people strategies can better enable them to adapt.

Trade: Navigating Geopolitical Instability

In our global economy, businesses need to sell and buy products and services freely to thrive and grow. This is why trade disruption – from geopolitical instability, inflation, climate change, currency fluctuations, and workforce availability – is such a major risk for leaders to manage. With an increase in geopolitical conflicts and political tensions in a major election year, it is essential for businesses to manage potential risks by building contingency into their supply chain management and growth strategies.

Technology: Balancing Operational Efficiency and Cyber Risks

New technologies are fundamental to increasing operational efficiency and for help businesses grow and access new markets. At the same time, the swift and universal uptake of these technologies is introducing new and significant risks. The CrowdStrike outage in July 2024, which caused 8 million Windows devices to fail and billions of dollars in business costs, is a prime example of what can happen when technology is disrupted by human error rather than criminal activity.

“The CrowdStrike failure was a huge wake-up call to clients around the world that a non-aggressive action, just a pure mistake, could create this kind of economic havoc,” says Eric. “Incidents like these demonstrate the importance of having frameworks to manage the many risk factors that come from developing, deploying and maintaining new technologies.”

Weather: Addressing Risks Coming from Climate Impacts

Extreme weather is having more significant and frequent impacts on communities around the world. Cyclones in the U.S., and flooding, extreme heat, drought, and bushfires across continents, are all examples of significant threats businesses are facing.

“Businesses are having to consider how to protect their operations with innovative risk management, mitigation and transfer solutions for weather-related disruption,” says Eric. “They’re also looking for ways to better understand potential climate impacts for every aspect of risk management and growth. One of our construction clients was bidding on a project in a high-heat zone. They wanted to know if our climate analytics could help them price the risk and we identified a solution through the use of parametrics. Another example is a financial services business looking to assess the impact of climate risk on their mortgage portfolio so they can determine its overall viability and how much capital to put behind it.”

Workforce: Adapting to New Expectations

New working patterns and technologies, along with a diverse multigenerational workforce are placing new demands on organisations to evolve their approach to employee engagement and their workforce planning strategies. Drawing on high-quality data and analytics can help clients refine their people strategies and programs to meet current employee expectations and close the gap for skills while managing budget constraints.

“For one of our large global logistics clients, we pooled many data sources including attrition, engagement, health and lifestyle data and put our data scientists to work,” says Lambros. “One of several important insights from this enabled the business to change their policy around recurring days off for their logistics drivers. Simply by moving from sequential days to non-sequential days, they achieved a tenfold reduction in workers compensation claims.”

Explore more from our Aon Insights Series:

Report

ASD Cyber Threat Report 2022-2023
Report

2024 Client Trends Report
Article

Why is Climate Change Important for Financial Institutions?

We start with the client pain point, not the solution. Our primary goal is to listen to the needs of clients so we can understand how to innovate on their behalf with our insurer partners or from a technology perspective to allow better decisions.

Lambros Lambrou

CEO of Human Capital, Aon

Staying informed and agile

These four megatrends are highly interrelated. Because of this, our clients recognise they cannot afford to consider them in isolation as they navigate these complexities and unlock opportunities in an increasingly interconnected world. Being better-informed is crucial if businesses are to have visibility of how these megatrends are impacting their operating environment and how scenarios could play out in the future.

To help our clients address business risks and inform their risk and people strategies, Aon has delivered a suite of market-leading tools – Analysers and Benchmarks - leveraging our extensive data and analytics capabilities. These tools provide real-time insights, helping clients balance risk tolerance, risk financing, and transfer more effectively.

“We have brought together experts and data and analytic capabilities to offer an incredible set of content and capabilities so our clients can make better decisions across all four of the megatrends,” says Lambros.

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

The contents herein may not be reproduced, reused, reprinted or redistributed without the expressed written consent of Aon, unless otherwise authorized by Aon. To use information contained herein, please write to our team.