Managing Risk and Capitalising Opportunities in Connected Asia

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Topics: Emerging Markets Emerging Risks Intellectual Property Mergers & Acquisitions Risk Management Supply Chain / Business Interruption Technology Topical Trends Trade Credit

Aon has published the 2022 Asia Market Review, Aon’s ninth annual publication on the risk management and mitigation landscape in Asia...

The report reveals insights on the key market-shaping forces of 2022 drawn from Aon’s long-running analysis based on the industry’s leading sources of data.

The report explores:

• An overview of what to expect from the economic recovery and reopening of the diverse Asian markets.
• Insights from Aon’s business leaders in key areas such as transaction liabilities, trade credit and intellectual property to help risk managers protect against balance sheet volatility; and
• Ways organisations from various industries can reduce the total cost of risk for their business.

Download the report here: 2022 Asia Market Review

Below are a few insights from the report:

Mergers & Acquisitions Transaction Liability

• As pharmaceuticals, renewable energy, technology and biotechnology markets continue to attract investors, claims activity is likely to increase.
• Although M&A pricing will increase in relation to Warranty & Indemnity (W&I), premium rates are expected to stabilise somewhat in the new financial year.

Intellectual Property

• New analytics tools, artificial intelligence (AI) and machine learning are available to help risk managers leverage their IP assets as collateral in borrowing, so as to benefit from a non-dilutive, competitively priced source of capital.
• In 2022, a significant expansion in lending capacity for the IP market is expected, with increasing demand from borrowers.

Trade Credit

• Inflation will lead to tightening monetary policy. Leveraged, weaker companies may struggle with increased finance costs.
• Insolvencies are forecasted to increase by 15 percent to 30 percent globally in 2022, as government support tapers.

Digital Economy

• Global supply chain disruptions and unprecedented increases in technology adoption caused major chip shortages, which are likely to continue into 2022.
• Increased investment in AI, automation and 5G deployment is likely, even as global supply chain challenges persist.
• Many digital economies will permanently adopt remote working or a hybrid model, which will help with the tech talent crunch.

Financial Institutions

• Deployment increased in credit insurance for project finance transactions aimed at sustainability-linked projects.
• Larger banks will 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.

Human Capital Risk

• There will be a greater need for companies to deploy lead analytics to understand their workforce and implement programmes that build workforce agility and resilience.
• Although companies are maintaining flexibility as they bring employees back on site, determining the right working model is a multifaceted process based on various factors.

Health (Medical Trend Rates)

• Medication-related expenses experienced some of the largest inflationary increases.
• The normalisation in utilisation patterns, emerging mental/musculoskeletal health risks and the potential for a greater COVID-19 cost burden will fall on the private sector. This will require employers to carefully analyse their medical plans and employee needs, as cost pressures increase.

Employee Wellbeing and Wealth Solutions

• Linking employee financial wellbeing to existing employee benefits drove perceived value.
• Foregrounded by volatile investment markets and rising inflation, monetary policies and regulatory settings will tighten, having impact on bond yields and employer pension accounting liabilities.
• Life expectancies will continue to increase due to wealth and healthcare improvements, as will above-inflation healthcare costs.

As traditional industry borders fall away in 2022, ecosystems and the digital platforms that enable them will continue to influence the future of business. Having an impact in the New Better will no longer be about offering the right product, but about advice and holistic solutions that will give organisations greater clarity and confidence.