Aon | Professional Services Practice
The Certainty of Uncertainty
Release Date: July 2025Risk surveys demonstrate the increased importance of emerging risks that are complex and uncertain, and demand consideration in the enterprise risk management approach of professional service firms. The insurance market is also adjusting, and resilience remains key for all.
International Relations theorist Stephen Walt’s description of a “Global Polycrisis”
Uncertainty is Mirrored in Risk Surveys
Risk surveys are a good place to start in understanding the risk landscape. Current surveys contain the usual mix of risks, consequences and external threats. Those threats, or shocks, emerge from an increasingly interdependent world, recent third party cyber sourced attacks being a good example.
The lists reflect perceived uncertainty and complexity, particularly from economic and geopolitical conditions and technology-driven change. There is no exact consensus among the many surveys since risks vary by sector, but uncertainty and new threats are consistent themes. Commonly listed factors involve areas of macro uncertainty (rather than direct and immediate risks), such as climate change and geopolitical uncertainty.
Cyber risks are near the top in all surveys. This is not surprising considering the evolving nature of ransomware attacks, the newly appreciated supply chain risks, and of course, the looming threat of AI generated attacks. That said, traditional risks may remain priorities, particularly those with ethical and reputational consequences in addition to the direct financial costs.
The Response?
The ability to deal with sudden or unexpected events is very important to professional firms’ business continuity and reputation management. How can firms prepare?
Many risks are outside of a firm’s control and the default is therefore consequence management. Horizon scanning, root cause analysis and scenario planning are commonly referenced tools to prepare for the “unexpected.”
Beware bias in identification and assessment. Bias can result in risks being ignored or underestimated. Some famous historic tragic events involved situations where risk assessments had been conducted, but the major risk that manifested itself had been ignored or underappreciated partly because the assessments were based on yesterday’s logic (hindsight bias).
Of continuing relevance is COVID-19. To quote Vaclav Smil, professor at University of Manitoba, in his 2008 book, Global Catastrophes and Trends, “The likelihood of another influenza pandemic during the next 50 years is virtually 100%.” The long-term horizon of the pandemic risk meant it was largely ignored.
This is understandable in many ways since immediate risks consume our consciousness. Even when events unfolded in 2020 the long-term consequences were not foreseen. The global scale and length of lockdowns were not expected, and as we have seen, solutions often lead to the next crisis, albeit of a different nature.
One wonders what would happen were another pandemic to arise. How prepared are governments and commercial entities? In fact, the lesson of COVID was that even if the specific risk is not recognised, business continuity and crisis management are vital success factors in dealing with the consequences. Resilience is a key concept.
Insurance Industry Reactions
Insurers are also grappling with the changing risk landscape. Will traditional insurance risks start to become difficult to price? Modelling is essential for insurability. Probability theory involves the assessment and measurement of risk. Broken down simply it is a mix of frequency and severity, and this requires past data. Uncertainty however implies limited data. Worst case scenarios rather than mid-range probability picks may warrant more underwriting consideration in areas such as systemic cyber and climate change perils.
While at this stage the insurance market remains generally positive, with stable or even softening conditions, insurers are monitoring geopolitical risks and economic uncertainties, which could negatively impact future risk environments. There is also concern about the future direction of cyber risks and inflationary pressures on claims costs in several sectors.
Insurers will of course be on enquiry in the usual areas, such as litigation and regulatory risks, but it is worth noting that they are increasingly interested in emerging risks perhaps most prominently AI usage, models, risks and governance. Insurers appear to be taking a long-term view, acknowledging the changing role of technology in the delivery of professional services.
Future Expectations?
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Risks arising from uncertainty imply a lack of full understanding and difficulty in quantifying the consequences, but they carry the potential for major impact. These conditions are expected to continue. The Uncertainty Index continues to rise year on year.
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Traditional risk categories such as operational, financial, and people remain the core for risk management strategies, but each now contain new dimensions that require exploration.
Read more about professional service firms and Enterprise Risk Management.
Contact
The Professional Services Practice at Aon values your feedback. To discuss any of the topics raised in this article, please contact Keith Tracey.
Keith Tracey
Managing Director
London
About Aon
Aon (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues provide clients in over 120 countries with the clarity and confidence to make better risk and people decisions that help protect and grow their businesses.
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