Aon has released a Megatrends report arguing that Australian businesses should assess major decisions against trade, technology, weather and workforce risks together, rather than one at a time.
The report suggests leaders view major decisions through four lenses: capital, operations, people and risk. The aim is to identify dependencies and weigh trade-offs. It warns that heavy reliance on a single supplier, technology, piece of infrastructure or set of skills can leave a business exposed when conditions change.
Kevan Johnston, Aon’s chief executive for Australia, said resilience was now about keeping the flexibility to make decisions as circumstances shift.
“For business leaders in Australia, that means understanding critical dependencies and making deliberate choices about where resilience can create the greatest value,” said Johnston.
The report draws on Aon’s Human Capital Trends Study from April. That study found 73% of organisations globally had deployed or were piloting AI, but only 18% said most of their workforce had been reskilled or upskilled in the previous year. The report builds on Aon’s earlier work on the same four forces, which it set out in its Client Trends report last year.
The report arrives as Australian commercial buyers have more bargaining power than at any time in recent years. Pacific commercial rates fell 12% in the third quarter, the 11th consecutive quarterly decline, according to Marsh’s Global Insurance Market Index. Aon’s own market data earlier this year put Australian property pricing down by between 11% and 20%, with capacity described as abundant and limits increasing.
In a falling market, the instinct is to bank the saving. Market commentators have pointed instead to the rare window for buyers to expand coverage. The dependencies Aon describes tend to surface at claim time as business interruption and contingent business interruption losses, and those extensions are often written with tight sublimits or short indemnity periods.
Not every client shares in the softening. Catastrophe-exposed property in flood, bushfire and cyclone regions continues to draw close insurer scrutiny, and claims history and program structure still drive individual renewal outcomes.
For brokers, the value of Aon’s framework lies in making it specific. The starting point is a map of the client’s single points of failure: the supplier that cannot be quickly replaced, the site that carries most of the production, and the technology platform that stops sales or operations when it goes down. That map shows where the current program is thinnest.
Supplier dependency is usually the clearest gap. Contingent business interruption extensions often cover named suppliers only, or cap unnamed suppliers at a small sublimit. With insurers competing for business, brokers are in a stronger position to negotiate higher sublimits, add critical suppliers by name, or extend cover to customers whose failure would cut revenue.
The indemnity period deserves the same attention. A 12-month period may look adequate on paper, but it can fall short if replacing specialised equipment or qualifying a new supplier takes longer. Testing the period against realistic recovery times, rather than renewing last year’s figure, is one of the cheapest improvements available while rates are falling.
Technology dependency needs separate treatment. Property business interruption cover generally requires physical damage, so a platform outage or cyber event without damage will usually fall outside it. That loss sits with cyber or system failure cover, and the two programs should be reviewed together so the gap between them is closed rather than assumed away.
Not every client will take up broader cover, even at softer prices. Recording the dependencies identified, the options offered and the client’s decision protects both parties if a loss later exposes a gap. When the cycle turns, clients who used this period to match their cover to their real dependencies will be better placed than those who simply took the discount.
