Navigating Volatility in Natural Resources: Risk Management as a Value Driver

Sector Pressures are Reshaping Risk Priorities

Rising global energy demand — driven by population growth, AI and data centers, and the electrification of transport — is putting pressure on the power generation sector, which must keep pace while contending with aging infrastructure and growing cyber exposure. Renewable energy developers are grappling with tariff impacts, cost inflation and skilled labor shortages, forcing them to reprioritize projects and markets. In mining, automation is increasing cyber exposure and environmental, social and governance (ESG) compliance remains mandatory to operate in many geographies. Across oil, gas and petrochemicals, regulatory complexity and environmental scrutiny are intensifying.

While each sub-sector faces distinct pressures, the industry as a whole faces a core set of risks — such as business interruption, regulatory and climate change, and environmental exposure — that consistently rank among the top concerns across all natural resources organizations.

These challenges underscore the need for a strategic approach to risk across the industry — one that sees risk management not as a cost center but as a driver of resilience and growth. Organizations that take this view are finding new ways to manage volatility, protect margins and strengthen stakeholder confidence.

Current Risk Realities: Familiar Risks, Intensified Impact

Aon’s Global Risk Management Survey shows that the following risks are the most critical challenges facing industry leaders today. These risks are increasingly interconnected and demand a more strategic, forward-looking approach to resilience.

Top Current Risks Facing Natural Resources Organizations

1. Business Interruption
2. Regulatory or Legislative Changes
3. Commodity Price Risk or Scarcity of Materials
4. Environmental Risk
5. Cyber Attack or Data Breach
6. Climate Change
7. Property Damage
8. Geopolitical Volatility
9. Weather and Natural Disasters
10. Cash Flow or Liquidity Risk

Business Interruption: A Multifaceted Threat

Business interruption (BI) remains the top concern for natural resources organizations, but its causes are evolving. Physical disruption is now compounded by cyber threats, climate volatility and supply chain fragility, creating cascading impacts that delay production, stall capital projects and erode investor confidence. In addition, higher input costs are raising break-even thresholds, which can delay final investment decisions (FIDs) on major projects and force operators to renegotiate engineering, procurement and construction (EPC) contracts or seek local suppliers.

The April 2025 Iberian Peninsula blackout underscored how grid instability can result in widespread disruption, while autonomous mining operations introduce new single points of failure. In early 2025, severe flooding across key mining regions in Western Australia forced multiple iron ore and lithium operations to halt production for over two weeks, highlighting how extreme weather can paralyze critical supply chains and trigger ripple effects across global markets.

Organizations should reassess their BI coverage to reflect both traditional and emerging exposures, including cyber-triggered outages and climate-related events. Diversified supply chains, predictive maintenance and scenario modeling can help anticipate cascading failures. Some organizations are also using parametric solutions to secure rapid liquidity after predefined events, enabling faster recovery and continuity in the face of fast-moving disruptions.

Cyber Risk: New Vulnerabilities from Digitalization

As operational risks increasingly stem from digital vulnerabilities, cyber threats are becoming a systemic concern. Smart grids, autonomous vehicles and remote-controlled operations introduce new attack surfaces, while the sector’s role in critical infrastructure makes it a high-value target. A successful breach can halt production, compromise safety and damage reputation — particularly in mining, where cyber maturity often lags behind that of other sectors. Indeed, cyber risk did not appear among the top 10 risks identified by mining organizations in the 2025 survey, but it appeared in the top five for power generation, oil and gas, and renewables.

Legacy systems and siloed recovery plans compound the challenge, leaving organizations vulnerable to extended downtime and operational disruption. In response, companies should reassess cyber maturity across both IT and operational systems, implementing multi-factor authentication, network segmentation and real-time monitoring to strengthen defenses and reduce exposure.

To build resilience, organizations should also ensure their cyber-insurance programs reflect operational realities, including coverage for business interruption and data recovery. Regular penetration testing and employee training remain essential to identifying vulnerabilities and reinforcing frontline defenses.

Commodity Price Risk: Navigating Market Shocks and Supply Pressures

Commodity price risk is deeply embedded in the DNA of the natural resources sector. Organizations are price takers in global markets, and prices are increasingly influenced by geopolitical tensions, trade policy shifts and environmental constraints. The scarcity of critical minerals, which are essential for energy transition technologies, is intensifying competition and driving up input costs, particularly in mining and renewables.

This volatility is already disrupting long-term planning and supply chain stability — undermining project viability across mining and renewables. In response, organizations are adopting more agile strategies, including strategic hedging, long-term supply agreements and vertical integration. Captives and cell facilities offer flexible risk transfer, while resource mapping and alternative sourcing reduce exposure to unstable inputs.

Navigating Regulatory and Environmental Risk for Long-Term Resilience

Regulatory and environmental risks are increasingly intertwined in the natural resources sector. Organizations must navigate a complex and evolving landscape of ESG standards, carbon accounting frameworks and permitting processes — all while managing the environmental impacts of their operations. Regulatory shifts, such as changes to emissions targets, land use restrictions and biodiversity protections, can alter project economics overnight.

At the same time, environmental performance is under growing scrutiny from investors, communities and regulators. In mining, tailings management and land rehabilitation are now central to securing a license to operate. In oil and gas, methane regulations and water usage restrictions are reshaping operational practices.

Given the rising consequences of environmental breaches, organizations must embed regulatory and environmental intelligence into strategic planning, using horizon scanning, scenario modeling and early engagement with policymakers to anticipate change and reduce exposure. Building ESG expertise and investing in compliance technology can help streamline processes, while aligning insurance coverage with environmental obligations assists in maintaining licenses to operate and reinforces long-term resilience.

Responding to Climate Risk While Supporting the Energy Transition

The natural resources sector is both exposed to the impacts of climate change and actively engaged in addressing those impacts. Rising temperatures, shifting weather patterns and more frequent natural disasters are disrupting operations, damaging assets and straining supply chains. In power generation, extreme heat can reduce efficiency and increase demand, while in mining, flooding and water scarcity affect extraction and transport. These pressures are placing greater stress on infrastructure and challenging traditional models of operational continuity and asset protection.

In response, many organizations are not only adapting their operations but also helping to drive the energy transition — investing in renewables, low-carbon technologies and circular resource strategies. Actions such as repurposing legacy assets, integrating climate risk into capital planning and collaborating on regional decarbonization initiatives are helping the industry contribute to long-term sustainability.

As these efforts evolve, there is growing recognition that managing climate and physical risk requires an enterprise-wide approach. This includes asset-level assessments, scenario modeling and adaptive infrastructure investment. Insurance programs should address both acute and chronic exposures, covering direct damage, business interruption and consequential losses. Alternative risk transfer options such as parametric solutions, captives and structured reinsurance can provide tailored protection and rapid liquidity, helping organizations maintain continuity in the face of disruption.

Looking Ahead: The Future Risk Landscape

While the top-ranked future risks reflect familiar challenges, they also present an opportunity for natural resources organizations to rethink how they manage complexity, protect margins and build resilience. Anticipating how these risks will evolve and preparing for their impact are key to maintaining strategic advantage in a volatile operating environment.

Top Risks Facing Natural Resources Organizations in Three Years’ Time

1. Commodity Price Risk or Scarcity of Materials
2. Business Interruption
3. Regulatory or Legislative Changes
4. Climate Change
5. Cyber Attack or Data Breach
6. Geopolitical Volatility
7. Cash Flow or Liquidity Risk
8. Economic Slowdown or Slow Recovery
9. Major Project Failure
10. Political Risk

Geopolitical Volatility: The Need for Coordinated Risk Response

Geopolitical risk is reshaping the operating environment for natural resources organizations. Regional conflicts, trade disputes and nationalization trends are disrupting supply chains, delaying projects and increasing regulatory scrutiny.

In oil and gas, sanctions and export controls can shift market dynamics overnight, while in mining, resource nationalism is leading to renegotiated contracts and expropriation threats. Political instability across key transit corridors — such as the Red Sea and the Panama Canal — is affecting logistics and insurance costs. The fragmentation of global governance is making it harder to navigate cross-border operations and maintain stakeholder alignment.

Against this backdrop, political risk must be embedded into enterprise-wide planning — not just to anticipate disruption but to enable strategic decision-making. This includes jurisdictional risk assessments, stakeholder mapping and scenario modeling to identify potential flash points early. Insurance solutions should cover political violence, expropriation and contract frustration to protect assets and maintain operational continuity.

Liquidity Risk and Major Project Failure: Complexity and Scale Amplify Risk

Cost inflation, currency volatility and tighter lending conditions are compressing margins and delaying investment. In renewables, developers are scaling back portfolios, focusing on the most viable projects. In oil and gas, capital discipline is tightening as lenders shift more risk to operators.

These pressures are compounded by the growing complexity of major projects, which are larger, more remote and more technically demanding than ever. Deepwater drilling, offshore wind farms and cross-border pipelines involve multiple stakeholders and jurisdictions, making them vulnerable to external shocks such as commodity price swings, regulatory shifts or geopolitical disruption. The risk of stranded assets is rising, and investor scrutiny is intensifying, particularly around ESG performance and long-term viability.

To navigate this complexity and keep projects on track, organizations must embed risk management across the life cycle, from feasibility and design to construction, operation and decommissioning. Dynamic modeling and contingency planning are essential throughout. Financing tools such as green bonds, blended finance and sustainability-linked instruments can help manage volatility. Captives, structured reinsurance and multi-line programs that evolve with the project can smooth cash flow and align coverage with key milestones.

Three Actions to Help Navigate Today’s Disruption Dynamic

In an environment defined by volatility, complexity and accelerating change, natural resources organizations need more than traditional risk management. These three actions can help leaders build resilience, protect value and stay ahead of disruption.

1. Leverage Data and Analytics to Quantify and Prioritize Risk

Advanced analytics and modeling are helping organizations quantify their total cost of risk and uncover hidden exposures. By integrating operational, financial and strategic data, leaders can prioritize risks, allocate capital more effectively and design targeted risk transfer strategies. Scenario modeling and predictive analytics also support better decision-making — particularly for complex projects and interdependent risks.

2. Use Alternative Risk Transfer to Manage Volatility

Resilient organizations are increasingly turning to alternative risk transfer (ART) solutions to address exposures that traditional insurance may not fully cover and to build more efficient risk financing programs. By leveraging third-party balance sheets — through captives, parametric solutions and insurance-linked securities — organizations can unlock new sources of capital, enhance liquidity and improve capital efficiency.

3. Reframe Risk Management as a Value Driver

Organizations can reframe risk management as a value driver. This shift moves beyond traditional protection models to a value-based approach to capital allocation in which risk becomes a lever for growth, efficiency and strategic advantage. By aligning risk financing with business objectives and embedding risk into capital decisions, organizations can optimize returns, strengthen stakeholder confidence and build long-term resilience.

Why It Matters

Natural resources organizations are operating amid constant and interconnected disruption. Those that treat risk as a strategic capability are better positioned to respond with speed, invest with confidence and lead with clarity. Taking a more integrated approach to risk and capital unlocks the flexibility needed to adapt, grow and deliver sustained value.

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