Intersecting Trends: The Future of Trade in a Technology-Driven World

Intersecting Trends: The Future of Trade in a Technology-Driven World
March 21, 2024 7 mins

Intersecting Trends: The Future of Trade in a Technology-Driven World

Intersecting Trends: The Future of Trade in a Technology-Driven World

As global trade grows amid a plethora of challenges, the integration of emerging technologies enables much-needed enhancements, while also opening the door to risks that require effective mitigation strategies.

Key Takeaways
  1. AI is a game-changing technology that will drive efficiencies and simplify how trade impacts the global economy.
  2. As technology further intersects with trade and enhances global supply chains, it also introduces potential costly risks and pitfalls.
  3. Proactive risk management strategies are essential to build resilience and protect against emerging AI threats.

The intersecting paths of technology and trade are fueling innovation that will deliver much-needed efficiencies in global supply chains. However, with new technology comes significant threats that must be properly managed.

Artificial intelligence (AI) is the game-changer, playing a vital role in helping move global trade through ever-complex regulatory challenges, trade laws, privacy regulations, and threats from cyber attacks and potential global trade wars.

But it’s no magic pill. AI is also a potential disruptive portal for emerging risks, from cyber threats to algorithmic biases. These pose challenges to supply chain management that must be properly addressed for AI’s full potential to be realized.

The Impact of AI on Trade

AI could increase global trade by almost 14 percentage points by 2040.1 It will enhance trade services and operations by automating processes, including invoicing customer support, optimizing transportation safety and efficiency, and strengthening supply chain resilience by predicting and mitigating disruptions.2

Many cargo vessels carry thousands of containers, which wind their way through multiple layers of the supply chain en route to their final destination. The use of AI helps predict where potential trade disruptions may occur on this journey.

“AI-capable technology is a significant discussion focus across the entire cargo transportation industry,” says Christopher Law, senior vice president in Aon’s United States National Marine practice. “There are also instances where AI is adopted to promote safety, prevent losses and improve trade efficiencies.

33T

Global trade hit a record $33 trillion in 2024, growing by 3.7 percent.

Source: UNCTD

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One application is integrating an AI-based vetting process into ocean marine cargo container booking to identify potential mis-declared hazardous cargo red flags. This will help increase safety and mitigate container vessel losses, and the associated supply chain disruptions.

Christopher Law
Senior Vice President, United States National Marine Practice
Case Study #1

Case Study: Supply Chain Control Tower Success

French company Schneider Electric has developed a software control tower that monitors the entire supplier network and re-routes orders to other companies or countries should issues occur.3 Digitalization of its supply chain allows Schneider to control, monitor and optimize every part of the process, enabling immediate responses to disruptions.4

Key benefits of a supply chain control tower application include:
20 percent cost reduction, due to minimized operational expenses and enhanced efficiencies
30 percent efficiency boost from a streamlined supply chain management and operations
50 percent faster issue resolution as potential issues are identified and mitigated

With Increased Technology Comes Additional Risks

The integration of advanced technologies like AI and blockchain in trade is streamlining supply chains, enhancing transparency and driving efficiency. However, their rapid adoption can also expose businesses to a variety of issues and risks.

Blockchain’s use in global trade is intended to provide real-time visibility and tracking of products throughout the supply chain. A series of blocks create a transparent and unchangeable record of transactions to help deliver secure transactions and on-demand insights. High costs, security concerns and scalability are among the issues that have slowed its progress.6

Case Study #2

Case Study: Blockchain Needs Widespread Adoption

In 2018, shipping giant Maersk partnered with IBM to develop TradeLens, a blockchain-based platform to promote more efficient and secure global trade.

TradeLens’ goal was to bring together all global maritime logistics into a single system to achieve full traceability of cargo. However, widespread adoption never occurred and TradeLens ceased operations in 2023.

“From a protected ledger perspective it makes tons of sense,” says Lee Meyrick, co-lead for Global Specialties and CEO of the Global Marine Team. “However, I have yet to see blockchain used widely in international trade to the extent that we predicted mainly because you need one version of blockchain for it to work."

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AI offers transformative potential, but like any innovation, it comes with risks — some of which are known and some emerging. We are proactively developing a risk framework that not only mitigates challenges but also ensures we can fully capitalize on AI’s benefits.

Magnus Roe
Global Chief Data & Analytics Office

4 Risk Management Strategies to Build Resilience

  • 1. Harness AI to Navigate Emerging Cyber Risks

    As AI continues to advance at an accelerated rate, businesses across industries are increasingly integrating AI-driven solutions into their operations. This introduces a range of new cyber risks.

    The rise of AI has not only led to innovative applications but has also created opportunities for malicious actors to exploit vulnerabilities. Understanding and mitigating these risks and opportunities is crucial for organizations aiming to leverage AI's potential while ensuring robust security and governance frameworks are in place.

  • 2. Reassess Cyber Insurance Coverage

    AI is rapidly changing the risk landscape. Traditional risk profiles, heavily focused on tangible assets such as property and equipment, are no longer sufficient. The increasing value of intangible assets, including AI algorithms and data, necessitates a shift in how risks are assessed and managed. While the integration of AI into business operations has brought about unprecedented opportunities, it has also accelerated cyber risks.

    Many organizations are still underprepared, with a significant protection gap evident in their current cyber insurance coverage. In fact, just 17 percent of global corporate information assets are currently covered by cyber insurance. Cyber insurance helps ensure businesses are safeguarding their operations and balance sheet.

  • 3. Make Better Risk Decisions with Data and Analytics

    Companies should use technology to better understand their risk exposures. By harnessing data analytics, predictive modeling and other advanced techniques, organizations can better understand their risk profiles and tailor insurance solutions to their specific needs. This data-driven approach enhances the ability to identify potential vulnerabilities and develop strategies that drive resilience within their economic ecospheres.

    Aon's suite of Risk Analyzers provide a granular view of risk, helping risk managers make better decisions beyond traditional benchmarks to build supply chain and trade resilience.

  • 4. Use Horizon Scanning to Understand Emerging Risks

    Horizon scanning supports the process of building organizational resilience. It is one part of a suite of tools to help practitioners understand and prepare for future risks. Horizon scanning identifies emerging risks before they become threats. Its intention is to start with a broad external perspective, but then quickly narrow the focus to how latent driving market forces have the potential to impact the organization’s risk profile.

Aon’s Thought Leaders

Matt Chmel
Chief Broking Officer, Cyber Solutions, North America

Pablo Constenla
Head of Cyber Coverage and Claims, Europe, the Middle East and Africa

Christopher Law
Senior Vice President, United States National Marine Practice

Lee Meyrick
Co-Lead, Global Specialties and CEO of Global Marine Practice

Brent Rieth
Head of Cyber Solutions, North America

Magnus Roe
Global Chief Data and Analytics Officer

Greg Sparacio
United States Middle Market Leader, Cyber Solutions

Soren Stryger
Chief Cyber Broking Officer, Europe, the Middle East and Africa

Richard Waterer
Chief Executive Officer, Global Risk Consulting

1 Trading with intelligence. How AI shapes and is shaped by international trade, WTO
2 The Dawn of AI, DMCC
3 Trade isn’t all about Trump, Financial Times
4 The supply chain of tomorrow, Schneider Electric
5 Supply Chain Control Towers: Revolutionizing Cost, Operational, and Inventory Management, Neudesic
6 What are the Disadvantages of Using Blockchain in Supply Chain Management, Disruption Hub

 

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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