Protect and Grow: An Integrated Approach to Tackling Global Volatility
May 10, 2023
In today’s increasingly volatile global economy, business leaders are focusing on two key areas of decision-making: Risk Capital and Human Capital.
Key takeaways:
- Decisions that were once limited to one part of an organization now have whole-enterprise implications.
- Alongside this global economic uncertainty, risk issues such as climate change, IP, cyber and supply chains are becoming increasingly important.
- Organizations are realising that a one-size-fits all approach to people management is no longer relevant.
Overview
As the global economy is rocked by financial sector turmoil, supply chain disruptions and high inflation and interest rates — while still battling to recover from the impact of the COVID-19 pandemic — business leaders are finding it increasingly harder to make the best decisions for their organizations.
“It’s challenging to be a successful business leader,” explains Greg Case, CEO at Aon. “The margin for error is rapidly decreasing and the stakes are only getting higher. It’s never been harder to make the right decision at work. The list of things our clients are expected to get right gets longer every day.”
Amid this complexity and volatility, business leaders are recognizing that decisions that were once considered limited to one area of an organization now have whole-enterprise implications. Risks such as climate change, ESG and cyber now possess a systemic threat to an organization. At the same time, issues such as workforce resilience in the wake of the pandemic have risen to the attention of the C-suite.
In this challenging economic and social environment, organizations are asking themselves two fundamental questions:
• How do I protect my organization against risk and volatility?
• How do I grow the potential of my workforce?
As a result, business leaders are focusing on two key areas of decision-making: Risk Capital and Human Capital.
In Depth
Any sign that the economic and business conditions may improve as we entered the new year has receded. As the International Monetary Fund outlines in its latest world Economic Outlook: “Risks to the outlook are heavily skewed to the downside, with the chances of a hard landing having risen sharply. Financial sector stress could amplify and contagion could take hold, weakening the real economy through a sharp deterioration in financing conditions.”
Alongside this global economic uncertainty, business leaders are tackling increasingly important issues such as climate change, intellectual property, cyber terrorism and supply chain interruption. Meanwhile, the nature of work, wellbeing and resilience are beginning to mean different things to different types of employees. Organizations are realising that a one-size-fits all approach to people management is no longer relevant.
However, while the business environment is constantly changing, it is becoming increasingly apparent that traditional insurance solutions alone aren’t structured to address emerging risks and conventional human resource strategies in isolation don’t account for the evolving expectations of top talent.
As a result, Aon has rethought its approach to meeting its clients’ needs to protect and grow their organizations by focusing on two key areas:
Risk Capital — Embracing Risk Presents a Challenge and an Opportunity
Aon’s recent Executive Risk Survey found that the most equipped leaders today understand that the vast majority of risks today are interconnected and that the pandemic was not just a one-time event, but rather a catalyst that exposed a myriad of new risks.
To tackle this new risk environment, better analytic capabilities are needed so that businesses can reach better-informed conclusions about their exposure levels and thereby make better decisions about what risks to protect and what to transfer.
“We’re dealing with a new era of volatility,” said Aon’s CEO of Risk Capital, Andy Marcell. ”Organizations are looking for help when it comes to making better decisions around protecting their businesses. And to tackle new risks, they’ll need better data and analytics so that we can provide better insights into challenges and come up with enhanced solutions.”
Human Capital — Building Workforce Resilience and a Strong Talent Strategy is Critical
In the years following the pandemic, business leaders have seen a swift evolution in the area of workforce resilience. As well as the importance of finding the most appropriate and flexible employee health and wealth benefits, the connection between employee wellbeing and productivity has become a hot topic across the boardroom.
At the same time, business leaders are working hard to define a strategy to find, attract, train and retain the best talent in order to build a resilient and flexible workforce for the future.
“Leading organizations know that their people are their greatest asset,” Lambros Lambrou, Aon’s CEO of Human Capital explained. “In a world of increasing complexity, volatility and interconnectivity, those organizations are prioritizing the alignment, retention and productivity of their people and looking for partners that can help them make better decisions about their most important assets.”
The Need for an Integrated Approach
As organizations around the world work to find a way through this increasing complex and volatile environment, they require integrated solutions that ladder up to their fundamental Risk Capital and Human Capital needs. And it is the business leaders who are armed with these integrated solutions — backed up by leading insight and advice driven by advanced data and analytics — who will be able to find the clarity and confidence they need to make better decisions around protecting and growing their organizations.
To find out more about Aon’s insights, click here.
The post Protect and Grow: An Integrated Approach to Tackling Global Volatility appeared first on The One Brief.