Aon released its 2022 report on Asian market trends on Wednesday, revealing crucial insights on how businesses can better adapt to the region’s risk and talent landscape.
Through analysis of key market areas, the report identified ways to mitigate risks caused by COVID-19 and other market-shaping forces such as climate change, cyber exposure, and political instability. Specifically, the report provided an overview of Asia’s economic recovery and reopening, while offering solutions from Aon business leaders and industry experts to protect against balance-sheet volatility and reduce total cost of insurable risk.
“The volatility of the last two years has brought the interconnectivity of risk into sharper focus, making risk management even more critical. Businesses are now more open than ever before to map current and underrated risks against their risk appetite early on, embracing better strategies to protect their organisations from volatility. We are also seeing the focus shift from event-based to impact-based risk assessments,” said Anne Corona, chief executive of Aon Asia Pacific, in the report’s foreword.
Corona also said that these “unprecedented times” have exposed the challenges specifically posed by long-tail risks. Events that were previously thought of as low risk have now become more common, requiring businesses to be more adaptable in their approach to risk management and assessment.
The following are some of the insights shared in the report:
M&A transaction liability
Claims activity is expected to rise, thanks to the ongoing growth of pharmaceuticals, renewable energy, technology, and biotechnology in Asian markets. Premium rates are also expected to somewhat stabilise, even with rising M&A transactions and an exponential increase in W&I insurance utilisation.
Inflation is expected to cause the tightening of monetary policies, with weaker companies struggling with the increase in financial costs. Insolvencies are also forecasted to increase between 15% and 30%, as government support starts to taper throughout 2022.
The use of credit insurance to support project finance transactions will continue to increase. Large banks, meanwhile, are expected to continue to focus on the impact of climate change on lending portfolios, investment strategies, regulatory reporting, shareholder expectations and broader stakeholder communications in their keynote messaging.
“At Aon, we believe that businesses in Asia can grow and thrive in a future that is still in flux, if they are better informed, better advised, and able to make better decisions for whatever the world needs next. No matter what happens in 2022, we are committed to using our experience, expertise, and advanced analytics to bring clarity and confidence to help Asia flourish.” said Owen Belman, head of Asia.
The full report, titled Managing Risk and Capitalising Opportunities in Connected Asia, is available at aon.com/apac.