Navigating New Forms of Volatility
Opportunities
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Navigating New Forms of Volatility
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If you would like to discuss any aspects of these insights, or to better understand our capabilities in this area, please do not hesitate to get in contact with our team.
Gary Moran
APAC
gary.moran@aon.com
Denise Poole
North America
denise.poole@aon.com
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Brian Jilley
EMEA
brian.jilley@aon.co.uk
“Aviation is not just a business. It’s part of the fabric and network which holds our world together. It’s an engine for job creation and social cohesion. It’s a place of innovation.”
Environmental, Social and Governance (ESG)
The transportation and logistics sector is a key contributor to climate change. Regulators, investors and other stakeholders are driving decarbonization efforts, and aviation firms are exploring new initiatives such as carbon capture. Meanwhile, severe weather and climate-related events continue to disrupt global supply chains, inflating costs and reducing margins.
Diversity, equity and inclusion (DE&I) initiatives must remain a core focus for the aviation sector. Data for the U.S. and the U.K. indicate that just over 4 percent of airline pilots are women . As new generations enter the workplace amid radically shifting sociocultural values, the need to address the limited exposure during early career conversations in schools, the lack of funding and the work/life balance, is critical. Moving ahead, the aviation industry would benefit from partnering with science, technology, engineering and mathematics (STEM) initiatives to boost DE&I across the sector.
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Talent
Demand for information technology, data science and other technical skills is rapidly outpacing supply, and many industry players across the sector are competing for top talent. Meanwhile, experts predict that the sector will need 645,000 pilots during the next two decades, and despite raising the retirement age, there are too few pilots to fill the pipeline.
While some roles must remain airport- and location-based, there is a growing realization that remote working can support operational efficiency and workforce wellbeing. Firms across the sector will need to reassess their talent strategy to attract and reskill a future-ready workforce.
Business Interruption
In Aon’s 2021 Global Risk Management Survey (GRMS), business interruption (BI) was ranked as the third-highest risk facing the transportation and logistics industry. National lockdowns, quarantine regulations and closed borders continue to restrict global mobility, while storing and maintaining grounded fleets amid volatility further contributes to rising BI insurance claims. Aviation operators appreciate the value of a robust response strategy. Although businesses have not historically purchased BI coverage, demand is growing rapidly as firms struggle to reduce volatility and strengthen balance sheets.
Cyber
To remain operational during the global lockdown, many businesses invested in new technology to support remote working. Cyber and data security investments are estimated to reach one-quarter of a trillion by 2026; a robust cyber risk strategy is imperative. The number of IP addresses and endpoints connected to a central network has increased exponentially, creating more potential points of exposure to cyber risks. Businesses need to focus on protecting their digital perimeter from failures and attacks.
In a post-pandemic world, experts expect airports and airlines to continue using technology to protect the safety of passengers, such as contactless processing of passengers and cargo. This digital transition will require more data and will add new dimensions to cyber risk profiles.
Opportunity in Ascent for Aviation
Despite the turbulence of the COVID-19 pandemic, the aviation industry is focused on future opportunities on the horizon. New technologies will enable businesses to invest in new capabilities and evolve their operating model to drive efficiency. Already, a European company is developing a fully electric airliner. This venture is an indicator of potential innovation, where aviation can elevate real change.
Fuelled by new talent and technology, the transportation and logistics sector – and the aviation industry in particular – can accelerate sustainable future growth.
Since the onset of COVID-19, the aviation sector has endured a turbulent operating environment. As business leaders mobilize strategies and respond to evolving challenges, new forms of volatility continue to drive a radical global reassessment of traditional operations, practices and values.
During Aon’s webinar series – Coming Through the Clouds – industry experts shared insights on the outlook for aviation as the industry emerges from COVID-19 and looks to new opportunities on the horizon.
When the pandemic first gathered momentum, 97 percent of aviation activity ceased entirely in some regions. With little to no traffic passing through airports, retailers, car parking and rental facilities, businesses across the travel industry rapidly responded to this change in demand. Airlines with grounded fleets repurposed their aircraft to capitalize on the soaring demand for cargo and logistics.
As the transportation and logistics industry looks ahead to 2022 and beyond, businesses should address several key risks:
Coming Through the Clouds
When the pandemic first gathered momentum, 97 percent of aviation activity ceased entirely in some regions.
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Suzanne Courtney, Director of Global Strategic Growth, Aon Assessment Solutions
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Kashif Khaled – Session 4
Centre for Aviation
David Barrett – Session 4
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