Leaders Need Help With Climate Risk Management: Aon Answers With New Services

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Leaders Need Help With Climate Risk Management: Aon Answers With New Services

Although organizations are being impacted significantly by climate risks, business leaders are not taking action; large consulting firms like Aon are launching new climate risk service lines, or acquiring boutique consultancies, to help firms act.

In a survey of over 1,500 UK business decision-makers, published by global risk management and insurance broker Gallagher in April 2023, nearly half of all respondents reported that their ability to do business had been impacted by extreme weather events. Additionally, almost three-quarters of respondents (73%) are concerned about how climate change will impact their operations over the next 10 years. Despite the current disruption and apprehension about future risk exposure, more than half (53%) of surveyed leaders have not taken steps to mitigate these risks, and around a third have not included climate change in their risk registers.

The main challenge that is preventing business leaders from taking action is insufficient internal expertise and a lack of understanding at executive level. Previously unpublished data from the recent Verdantix net zero and climate risk global corporate survey reveals that insufficient expertise is the largest challenge for firms looking to use climate risk modelling and analysis for strategy development. Around 58% of participants find a lack of internal expertise to be either very challenging or challenging. Equally, the second and third most prevalent challenges were that organizations are unsure on how to map climate risk data to business impacts, and don’t know where to source climate risk modelling and analytical tools.

Hence, corporates are looking for guidance and support to assess their climate risk exposure, then construct and execute action plans. To meet this demand, professional services provider Aon launched a Climate Risk Advisory team at the start of May 2023 to offer physical risk analysis services and support climate risk decision-making for financial services, public sector and real estate firms. Prior to this announcement, Aon acquired ERN, a Mexico-based catastrophe modelling and consulting firm, in November 2022, and partnered with climate risk software and data provider Jupiter Intelligence the previous August. Aon intends to provide an end-to-end approach to risk modelling and management, from assessing exposure to acting upon strategies. We anticipate other services firms will seek to gain market share in the same fashion.

For more information on climate change consulting, watch out for our upcoming Climate Change Consulting Green Quadrant report and see our current research on net zero consulting services: Smart Innovators: Net Zero Consulting Services Providers and Market Size And Forecast: Net Zero Consulting Services 2022-2028 (Global).

Alice Saunders

Industry Analyst

Alice is an Industry Analyst in the Verdantix Net Zero & Climate Risk Practice. Prior to joining Verdantix she completed a Master's degree in Nature, Society and Environmental Governance at the University of Oxford, earning a distinction. Her thesis project focused on species redistribution due to climate change and woodland ecosystems. Alice also holds a BA in English Literature from the University of Warwick.