As Climate Volatility Intensifies, FAB Leaders are Rethinking Risk

As Climate Volatility Intensifies, FAB Leaders are Rethinking Risk
September 3, 2026 8 mins

As Climate Volatility Intensifies, FAB Leaders are Rethinking Risk

As Climate Volatility Intensifies, FAB Leaders are Rethinking Risk

Climate volatility is reshaping the food, agribusiness and beverage value chain, driving disruption across production, supply chains and pricing. Organizations that can quantify exposure and apply data driven risk strategies are better positioned to protect margins and sustain performance.

Key Takeaways
  1. Climate risk is shifting from isolated asset damage to a systemic, value chain challenge, with yield variability, supply disruption and input volatility driving financial exposure.
  2. Traditional risk tools alone are not sufficient. Leading organizations are combining analytics, operational resilience and integrated risk solutions to manage volatility more effectively.
  3. Data-driven climate insights enable better decisions on sourcing, investment and risk transfer, helping organizations stabilize margins and build long-term resilience.

Weather-related risk has always been a defining feature of agriculture and food systems. Today, climate change is increasing both the frequency and severity of disruption. Extreme events and shifting weather patterns are driving yield variability, quality impacts and operational interruptions.

Climate risk is no longer a future concern for agrifood systems — it is restructuring production, pricing and logistics, with material consequences for financial performance across the entire food, agribusiness and beverage (FAB) value chain.

Historically, organizations have focused on property damage and other first-party exposures linked to acute events. That view is no longer sufficient. As climate impacts become more interconnected, risk is extending across supply chains and business operations. Production shortfalls, input volatility and logistics disruption now drive a growing share of financial exposure.

3rd

Climate change is projected to become the third most significant risk facing FAB companies in three years’ time, up from the fifth most significant risk today.

Source: Aon’s Global Risk Management Survey

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Agricultural risk is shifting from a traditional asset damage problem to a production and supply chain resilience challenge. Yield variability, operational disruption and correlated risks across portfolios are now the dominant drivers of financial exposure.

Susan Doering
Global Food, Agribusiness and Beverage Leader and Enterprise Client Leader

Traditional risk management tools remain important, but they are not designed for this level of systemic volatility, because:

  • Diversification is less effective when weather patterns shift across multiple regions at the same time.
  • Hedging markets are limited or absent for many specialty crops.
  • Insurance does not fully address yield variability, supply shortages or cost increases that develop over time.

As a result, organizations face a widening gap between exposure and protection, and there is a clear opportunity for more integrated solutions. Given that risk profiles vary tremendously across FAB businesses by geography, subsector and value chain position, there is no panacea. Instead, bespoke solutions are required to build resilience, incorporating analytics, advisory and traditional and alternative risk solutions.

Aon is innovating in these key areas to help businesses navigate near-term challenges and build long-term resilience:

  • Analytics

    Effective climate risk management starts with quantifying exposure. Advanced analytics enable organizations to assess both first- and third-party risks and translate climate volatility into business-relevant insights that inform enterprise-level decisions.

    Climate Analytics | Aon Climate Risk Advisory

    A complete view of climate risk requires an understanding of past, present and future conditions. Aon’s Climate Risk Monitor combines historical weather data, near-term forecasts, long-term hazard projections and high-resolution flood mapping to identify exposure at both asset and portfolio level. This enables organizations to pinpoint critical vulnerabilities and prioritize mitigation.

    Crop Yield Models | Aon Agriculture Resilience Center

    Crop yield models link environmental conditions to production outcomes. By simulating soil health and climate scenarios, Aon assesses how changes in weather patterns affect yield stability, supplier reliability and the financial performance of agricultural operations. These insights also support the valuation of resilient practices and can inform insurance structures.

    Risk Finance Analytics

    Analytics support more effective risk financing decisions by modeling and comparing different risk transfer strategies. Organizations can evaluate the trade-offs between traditional insurance, alternative structures and risk retention, enabling a more optimized balance between cost, coverage and capital efficiency.

    Supply Chain Analytics | Aon Global Risk Consulting

    Understanding climate exposure requires visibility across the full value chain. Aon’s supply chain analytics identify critical dependencies, concentrations and single- or sole-source suppliers. By prioritizing inputs based on loss potential and modeling how disruption cascades through operations, organizations can quantify exposure and target mitigation where it has the greatest financial impact.

  • Advisory

    Analytics alone do not reduce risk. Organizations must translate insight into action to protect operations and financial performance.

    Mitigating climate-driven risk often requires investment in resilience, particularly where exposures cannot be fully transferred. In these cases, organizations must embed risk management into day-to-day operations, supply chain strategy and capital allocation decisions.

    Aon’s advisory capabilities help clients interpret complex risk data and apply it in practical ways. This includes prioritizing mitigation actions, evaluating trade-offs between investment and risk reduction, and aligning stakeholders across finance, operations and procurement.

    By linking climate analytics to operational and financial decisions, advisory support enables organizations to maintain business continuity, strengthen resilience and improve the return on resilience investments.

  • Risk Solutions

    Managing climate risk requires a structured approach to risk transfer and financing. While some exposures can be mitigated operationally, others must be transferred or retained in a way that protects financial performance and supports long-term resilience.

    Traditional

    Traditional insurance solutions, including property coverage for physical asset damage, cargo or stock throughput coverage for goods in transit and storage, and crop insurance for yield or revenue loss, provide a critical baseline of protection. Even as risks evolve, each remains a valuable tool for managing risk in the FAB value chain.

    Alternative

    Alternative risk solutions are an expanding option as advances in data and analytics improve risk quantification, and organizations increasingly seek flexible ways to retain, transfer and finance exposures.

    Parametric insurance provides payouts based on predefined triggers, such as temperature, rainfall or other weather thresholds. This enables faster liquidity and can cover risks that are difficult to insure traditionally.

    Structured risk programs allow organizations to retain a defined portion of risk while optimizing cost and coverage. By layering exposures, companies can align protection more closely with their risk appetite.

    Captive vehicles enable organizations to finance risk internally while maintaining access to external capital. These structures can be used to access reinsurance markets and alternative sources of capacity, including institutional investors and sovereign wealth funds.

    Together, these tools allow organizations to not only transfer risk where possible, but also retain and finance exposures more strategically. This helps ensure that risks that cannot be fully insured can still be effectively managed while protecting long-term financial performance.

How Climate Change is Redefining Risk and Insurability Across FAB Subsectors

  1. Row Crops:
    Yield variability, water stress and regional concentration risk make production less predictable and create protection gaps that challenge traditional insurance models.
  2. Specialty Crops:
    Drought, excess rainfall and localized climate shocks disrupt production in concentrated growing regions, increasing supply volatility and price instability while leaving many climate-related losses difficult to insure effectively.
  3. Beverage:
    Shifting precipitation patterns, water scarcity and climate-driven disruptions to agricultural inputs increase supply chain volatility and costs, with resulting financial impacts often falling outside the scope of traditional insurance.
  4. Aquaculture:
    Climate-driven ocean warming, extreme weather and ecosystem changes are reducing production reliability, increasing biological risks and making operations harder to insure and manage.
  5. Livestock:
    Extreme heat, drought and severe weather are reducing animal productivity, increasing feed and operating costs, disrupting supply chains and exposing producers to losses that are often inadequately insured.

Building Resilience in the FAB Industry

Quantify, Manage and Transfer FAB Climate Risk

Climate and weather challenges reverberate across the entire FAB value chain, from growers and manufacturers to retailers and investors. Navigating this complex and evolving landscape requires a clear view of risk: where it sits, who is exposed, and what can be mitigated or transferred.

With advanced analytics and the right consultation and insurance support, companies can turn complexity into clarity, integrating climate, production and financial data to quantify risk in business terms. Now is the time to make informed, forward-looking investments in both climate resilience measures and scalable risk transfer solutions that protect long-term financial outcomes.

Connect with Aon to access actionable insights, take control of climate risk and protect your organization.

Aon’s Thought Leaders

Susan Doering
Global Food, Agribusiness and Beverage Leader and Enterprise Client Leader
susan.doering@aon.com

Liz Henderson
Global Head of Climate Risk Advisory
elizabeth.henderson@aon.com

Subsector Contributors

Row Crops

Tom Mortlock
Head of Climate Analytics, Asia Pacific
tom.mortlock@aon.com

Mostafa Nayyerloo
Principal Risk Consultant, Australia
mostafa.nayyerloo@aon.com

Travis Stewart
Senior Vice President, United States
travis.stewart@aon.com

Cecilia Tse
Director, Risk, Climate & Sustainability, Aon Commercial Risk Solutions, Asia Pacific
cecilia.tse2@aon.com

Specialty Crops

Emmalina Glinskis
Senior Associate Director, Climate Risk Advisory, United States
emmalina.glinskis@aon.com

Nicolas Gonzalez Naranjo
Director, Reinsurance, United States
nicolas.gonzalez.naranjo@aon.com

Jason Hernandez
Business Development and Strategic Solutions Lead, United States
jason.hernandez@aon.com

Dominic Probyn
Managing Director, Climate Risk Advisory, United Kingdom
dominic.probyn1@aon.co.uk

Enrico Trombetta
Deputy Head of Consulting, Italy and South-East Mediterranean
enrico.trombetta@aon.it

Livestock

Tami Griffin
National Practice Leader, Food, Agribusiness & Beverage Industry Practice, United States
tami.griffin@aon.com

Aquaculture

Tomas Stryncl
Senior Vice President, Marine, Canada
tomas.stryncl@aon.ca

Dagfinn Ulriksen
Special Adviser and Head of Aquaculture, Norway
dagfinn.ulriksen@aon.no

Beverage

Vesa Hakanen
Supply Chain Risk Solutions Leader, Europe, the Middle East and Africa
vesa.hakanen@aon.com

General Disclaimer

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.

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