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Introducing Aon One – Delivering Value and Solutions in Changing Global Markets
Introducing Aon's One Magazine for Global Value, Thoughtful Insight and Enlightening Case Studies
This article was published in the Q1 2007 issue of Aon One, March 2007.
For organizations operating at a global level, the pace and degree of change is greater now than ever. The combination of explosive growth in emerging markets, reinvention of business models through outsourcing and the effect of the Internet, plus a series of unprecedented natural disasters that could herald fundamental climate changes, mean that the leaders of global organizations must contend with a new and daunting set of risks.
Global markets and economies are transforming. Asia, and China in particular, will wield significant influence on the world economy over the next 25 years, yet this is a region where traditional corporate insurance is far from common. Conducting business in Asia, whether by trading, constructing plants or developing joint ventures, carries a wide range of risks. Businesses need to manage them by establishing the right relationships in those regions, both at an operating level and with knowledgeable business advisors.
At the same time, organizational boundaries are being stretched and blurred by new operating models. It is no longer enough to understand your own operations and related risks. You have to understand the network of relationships that exists in both your supply and delivery chains, and manage the risks they present. If an outsourced service provider fails to deliver, for example, what protection do you have against the immediate financial impact, and how will it affect your reputation, market share and stakeholder confidence?
As if that were not enough, the specter of global climate change takes risk to a new dimension. While scientists may disagree about the ultimate impact of climate change, the world is already experiencing turbulent weather patterns, resulting in everything from mild inconvenience to catastrophic damage that reshapes entire geographic and economic regions.
Delivering global solutions
When global leaders turn to professional service firms for advice and assistance, they (rightfully) expect much more than traditional approaches to risk management. Because they are competing internationally and face new risks, they demand partners who can work with them globally; who understand complex and emerging risks; and who are backed by a deep understanding of the markets and countries in which they operate. Which leads to a key question: What does the ideal risk partner look like? Our clients point to three key qualities.
First, a risk partner must have a deep understanding of your business and risk issues—one that is not just based on generic knowledge of your industry, but that is developed through dialogue so they understand the unique combination of risks you face. They also need to understand emerging risks, and be able to identify risks you haven't even considered.
Second, they need to be able to help you choose the right approach to managing each risk for your business. Maximizing capital efficiency and balance-sheet strength means more than just pushing out into the insurance markets the risks that are easy to cover, and absorbing the others. It means understanding all the avenues that exist to transfer risk, and being able to provide an objective assessment of which risks to retain, and which are more effective to transfer. And it means not only defining the strategy, but delivering it.
Perhaps most important, your professional risk service firm needs to bring great people to the table. You employ the best people you can find, so it makes sense that you also demand the best from your professional partners. Not just the sales team looking to win your business, but the service team members who will actually manage it day to day. Not just in one country, not just in one region, but around the globe, wherever you are active.
Based on feedback from our clients, there are three simple questions you can ask that will help you identify a good risk partner:
1. Do they truly understand my business?
2. Do they have the technical skills to deliver solutions to complex problems?
3. Can they bring good people to the table in the countries where I operate?
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