Aon CEO Greg Case: Success in a World of New and Increasingly Volatile Risks
Whether it’s the pandemic, cyber risks or the impacts of climate change, the last two years have taught today’s businesses that they face a host of — sometimes existential — challenges. This year’s Aon Global Risk Management Survey had risk professionals naming cyber attacks, business interruption and global economic uncertainty as their top three concerns. Aon has found that, to succeed in today’s world, businesses need to focus on four critical priorities: navigating new forms of volatility, rethinking access to capital, building a resilient workforce and addressing the underserved. In this interview, Greg Case, Aon’s chief executive officer, discusses the impact of emerging risks and volatility, and how business leaders can gain the clarity and confidence they need to make better decisions that can help protect and grow their organizations. For more with Greg Case, listen to the On Aon Podcast interview, available January 24.
Chief Executive Officer at Aon
How is the nature of risk changing for organizations?
We’ve seen a number of risks amplified as part of the pandemic. We see this everyday: increased cyber events, weather events, supply chain disruptions, etc. These new forms of volatility used to be on the horizon, but now they're on our doorstep and they’re fully interconnected. And with increasing interconnectivity, it’s not just about the specific risk in your business but how it’s connected to a series of risks over time. Cyber incidents have far-reaching impacts and pose threats to everything from intellectual property to supply chain disruption. More than ever, understanding that interconnectivity is critical.
How are new forms of volatility affecting businesses? How can that volatility be managed?
Because risk and volatility are so interconnected, businesses need to take an entirely different approach. The pandemic has completely altered the CEO agenda. Cyber, Climate, Pandemic, IP – these are risks that have far-reaching impacts but also present opportunities. Our research shows CEOs are now more willing to address the nature of these risks, and it is our job at Aon to ensure we are helping them with the best information, analytics and expertise possible so that they can make the best decisions for their business.
Climate change is a massive risk with increasing volatility; how are we to approach this?
Climate change is not just an issue of science or weather or catastrophes, it's one of people. And one in which the communities most vulnerable to the consequences of climate change will no doubt bear the brunt if we fail to act collectively now. Private capital has a role to play in addressing public risks associated with volatility and scale that we’re just starting to see today. The question is, how do we build investment momentum? And how do we spur the innovation that comes with it to mitigate volatility? Private market activity will have the greatest impact by partnering with the public, social and multilateral sectors. From Aon's view, the business imperative is not about spending more time trying to optimize a limited market, but in creating net new investment capacity. And this is not a concept, we've proven that matching private capital with public interest is viable. Our discussion going forward must include how we create the incentives to do this everywhere around the world at a level of investment that will materially advance technology, encourage companies to take action and accelerate the path to zero carbon.
You mention the importance of investment. What role does capital play in addressing new business priorities?
To successfully address these new forms of volatility, we have to access new forms of capital. The capital across the balance sheets of all the insurers in the world is about $4.5 trillion. That’s an absolutely critical partnership, but we also need to connect with sources of capital that can play a role through those partners. Whether it’s in pension or sovereign funds, that could open up the window to the better part of $150 trillion. So, magnifying that $4.5 trillion to $150 trillion with the mission of matching capital to risk, to reduce volatility as companies take action to do things like move to zero carbon or address these other forms of volatility is a tremendous opportunity.
Resilience seems more important than ever in the workplace. How should companies consider building resilience?
As the pandemic began to impact the way we live and work, we as a company rejected the idea of hoping for a return to a “new normal” once COVID-19 had receded. For Aon, it’s all about creating a “new better." It's taking what we’ve learned and figuring out a better way of doing things, a more flexible way of doing things. And we've got to do this in the context of the workforce and all the things that come with that, giving employees what they need to be resilient in the face of future crises. Tied to this is the issue of addressing markets that have been underserved, or not served at all… How do we address this appropriately? A great example: gig workers. How do we address a set of needs among those gig workers that is both holistic, broad-based but also very, very specific to each worker?
What must businesses do to succeed in this world of increasing, more complex and interconnected risks?
There really needs to be a general shift in mindset around being prepared for risk, and having the data and analytics, as well as the expertise, to make better decisions on how to avoid or mitigate the risks organizations face. More than 18 months after the global outbreak of the COVID-19 pandemic, Aon surveyed 800 C-suite level leaders and senior executives in the U.S., the EU, the U.K. and Canada to reveal how organizations are preparing for and responding to interconnected risks. We found business leaders have a renewed confidence in the economy and a greater appetite to embrace calculated risks. We are at an inflection point where businesses are not only focused on overcoming the current challenges we are facing, but shifting to think about other long-tail risks and how to prepare for them. As leaders look at the future of their businesses in an increasingly volatile world, the pandemic continues to reshape their views of risk and sharpens their need to make better decisions. The past year has given leaders the insight they need to understand the dynamics of long-tail risks and the need to be better prepared, giving them the confidence and certainty they need to make better decisions.