Business Interruption: Managing Risk in an Interconnected World

Why Business Interruption is a Growing and Complex Threat

From cyber attacks and natural disasters to labor strikes and geopolitical conflicts, business interruption is a critical risk impacting businesses worldwide, with each of these threats capable of severely disrupting operations. Cyber risk, in particular, is becoming a more prominent contributor to overall business interruption. Meanwhile, inflation continues to reshape asset valuations and accelerate shifts in risk exposure, adding further complexity to the landscape.¹

In 2024 alone, natural disasters resulted in $368 billion in economic damage — approximately 60 percent of which went uninsured.² The ripple effects of these disruptions extend far beyond individual companies to affect suppliers, customers and entire value chains. Smaller businesses, which are often less resilient, can suffer catastrophic losses, threatening cash flows and customer satisfaction across industries and economies. 

Business Continuity in a Rapidly Changing Landscape

Global interdependencies, the accelerating pace of regulatory and geopolitical change, and even talent shortages in areas such as artificial intelligence (AI) and analytics make business continuity planning more complex than ever. Organizations must anticipate a wider array of threats and be prepared to respond swiftly and effectively.

Strengthening Resilience Against Business Interruptions

1. Ensure Your Insurance Coverage Reflects Evolving Risks and Asset Values
   Businesses must avoid a “set and forget” approach. It is essential for companies to continuously evaluate their risk profiles and insurance policies in collaboration with their brokers to address emerging risks and coverage gaps.
   
   Since not all business interruption risks are insurable, companies may need to enhance their insurance programs with alternative capital market solutions, such as parametric solutions, to better protect their balance sheets. Specialized products, such as contingent business interruption insurance and pre-loss valuation, can also facilitate more accurate risk transfer and improve claims management.
2. Embed Geopolitical Risk into Your Strategic Planning
   Trade disputes and international tensions demand that companies integrate geopolitical analysis into their risk frameworks. Scenario planning, supply chain diversification, currency hedging and asset ring-fencing help stabilize operations and financial performance. Establishing rapid-response teams will help a business act decisively should disruptions occur.
3. Diversify and Strengthen Your Supplier Risk Management
   Mitigating supply chain risk through diversification and supplier risk-proofing remains essential. Some organizations have opted to balance increased storage costs with improved resilience by increasing their inventory buffers to absorb short-term shocks. AI can help businesses enhance their supplier selection and inventory management, thereby improving their responsiveness.
4. Continuously Update Your Security and Continuity Plans
   Regularly reviewing and refining business continuity and security plans ensures they remain effective against evolving threats. This measure includes disabling unnecessary services, enforcing multifactor authentication, training employees and conducting incident simulations. AI-powered threat detection and zero-trust architectures further enhance preparedness.
5. Deploy Generative AI with Governance and Training
   Generative AI offers powerful capabilities to predict, analyze and plan for potential interruptions. However, without robust governance, risk assessment and employee training, its misuse can introduce cyber-security and misinformation risks. Thoughtful, controlled deployment maximizes AI’s value as a risk management tool.

Why It Matters

Business interruption is a fundamental risk and a critical concern for organizations. The losses can be significant and, in many cases, materially compromise operations.

To mitigate this risk, organizations are increasingly integrating advanced technologies, diversifying supply chains, embedding geopolitical insight, and maintaining dynamic continuity plans aligned with regulatory requirements and ethical standards. Those that also optimize their insurance coverage are better positioned to absorb shocks, recover stronger, and build long-term resilience and trust. In a world of intensifying competition, the ability to respond effectively to disruptions and maintain continuity can be a true differentiator.

¹ “A massive tech outage is causing worldwide disruptions. Here’s what we know,” Associated Press, July 19, 2024, https://apnews.com/article/what-is-crowdstrike-worldwide-outage-94b4fc5ac6eed46ddcd565a5f1e4b916; Mari Yamaguchi, “Airline hit by a cyberattack, delaying flights during the year-end holiday season,” Associated Press, updated December 26, 2024, https://apnews.com/article/japan-jal-cyberattack-flights-travel-04fbd4848f3015a77057339a5c90ca32; Kit Eaton, “Natural Disasters Hit Florida Small Businesses Hard,” Inc., September 27, 2024, https://www.inc.com/kit-eaton/natural-disasters-hit-florida-small-businesses-hard.html; Ana Faguy, “IV fluid supplies in US disrupted by Hurricane Helene,” BBC, October 4, 2024, https://www.bbc.com/news/articles/cz04nl32e7yo; Suhauna Hussain, “‘We will not be closing.’ Amid the fires, employers and employees walk a fine line between work and safety,” Los Angeles Times, January 11, 2025, https://www.latimes.com/business/story/2025-01-11/how-workplaces-are-dealing-with-los-angeles-fires; Jeremy Repanich, “How the L.A. Wildfires Pushed the City’s Restaurants to the Brink,” Robb Report, February 21, 2025, https://robbreport.com/food-drink/dining/la-wildfire-aftermath-restaurants-1236230389/; Eleanor Butler, Angela Barnes and Indrabati Lahiri, “Spain and Portugal power outage costs ‘likely to be in tens of millions,’” euronews, updated April 29, 2025, https://www.euronews.com/business/2025/04/28/how-spain-and-portugals-economies-could-be-hit-by-the-blackout; Mandy Taheri, “Puerto Rico Blackout: Entire Island Without Electricity Amid Grid Failure,” Newsweek, April 16, 2025; https://www.newsweek.com/puerto-rico-blackout-entire-island-without-electricity-amid-grid-failure-2060739; Yan Zhuang and John Bartlett, “Chile Declares Curfew as Power Outage Sweeps Country,” The New York Times, February 25, 2025, https://www.nytimes.com/2025/02/25/world/americas/chile-power-outage.html; Joel Rose, “Boeing posts a $6 billion loss as striking workers vote on a new contract,” NPR, October 23, 2024, https://www.npr.org/2024/10/23/nx-s1-5162174/boeing-quarterly-loss-striking-machinists-contract; “Client Alert: Key Strategies for Businesses Navigating Tariff Impacts,” Aon, April 9, 2025, https://www.aon.com/en/insights/alerts/key-strategies-for-businesses-navigating-tariff-impacts; John Power, “Houthi Red Sea attacks still torment global trade, a year after October 7,” Al Jazeera, October 5, 2024; https://www.aljazeera.com/economy/2024/10/5/a-year-after-october-7-houthi-red-sea-attacks-still-torment-global-trade.
² 2025 Climate and Catastrophe Insight, Aon, https://www.aon.com/en/insights/reports/climate-and-catastrophe-report.

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