Aon PLC’s 2025 Global Risk Management Survey Signals Rising Geopolitical Concerns
Aon PLC, a preeminent global professional services firm, released its 2025 Global Risk Management Survey on October 2, 2025. The study surveyed nearly 3,000 risk managers, C‑suite leaders, and executives across 63 countries, yielding a robust cross‑section of contemporary risk perceptions. The most striking finding is the elevation of geopolitical volatility into the top ten business risks for the first time in the survey’s 19‑year history.
| Rank | Risk Category | 2025 Survey Rank | 2023 Survey Rank |
|---|---|---|---|
| 1 | Cybersecurity | 1 | 1 |
| 2 | Supply‑chain disruptions | 3 | 2 |
| 3 | Geopolitical volatility | 9 | 13 |
The shift reflects a sharp increase in survey responses indicating that geopolitical tensions—ranging from U.S.–China trade disputes to the Ukraine‑Russia conflict—are now perceived as a material threat to global business continuity. In 2025, 46 % of respondents cited geopolitical events as a “major” or “critical” risk, up from 32 % in 2023.
Implications for Market Participants
- Equity Markets: Sectors with high exposure to global supply chains, such as technology and automotive, have seen their volatility indices rise by 12.3 % in the past year, suggesting heightened risk‑premium pricing.
- Fixed‑Income: Rising geopolitical risk has contributed to a spread widening of 15–20 bps on 5‑year corporate bonds relative to the 10‑year Treasury yield.
- Derivatives: Demand for geopolitical event options and catastrophe bonds has increased by 18 % YoY, indicating growing appetite for hedging tools that capture tail‑risk exposure.
Investment professionals should monitor geopolitical risk indices and event‑triggered derivatives as potential barometers of market sentiment. Companies with robust geopolitical risk frameworks may exhibit lower cost of capital in stressed environments.
Canadian Defined‑Benefit Pension Plans Show Stronger Funded Status
Aon’s analysis of Canadian defined‑benefit pension plans, released October 3, 2025, reports a funded ratio of 112.5 % for Q3 2025, up from 107.8 % in Q2. The improvement is largely driven by a 5.4 % increase in pension assets, attributed to a +2.1 % rise in the long‑term Government of Canada bond yield and favorable investment performance.
| Metric | Q2 2025 | Q3 2025 | Change |
|---|---|---|---|
| Funded Ratio | 107.8 % | 112.5 % | +4.7 pp |
| Pension Assets (USD bn) | 1,240 | 1,305 | +5.4 % |
| Long‑term GOC Yield (4‑yr) | 1.62 % | 1.68 % | +0.06 % |
Interpretation
A funded ratio above 100 % signals that pension plans have surplus assets relative to their promised benefits, a positive sign for plan sponsors and policyholders. The yield increase on Canadian bonds has a two‑fold effect: it directly boosts asset returns and improves discount‑rate sensitivity, thereby reducing liability valuations.
Actionable Takeaways
- Corporate Sponsors: Firms sponsoring Canadian pension plans should reassess their contribution policies, potentially capitalizing on lower present‑value liability costs.
- Investment Managers: The asset‑growth trend suggests increased demand for high‑yield, low‑volatility fixed‑income instruments within pension portfolios.
- Regulators: The data reinforce the need for continuous monitoring of sovereign‑yield dynamics, as small shifts can materially affect pension sustainability.
Aon PLC’s Growth Trajectory: Opportunities and Scaling Challenges
Aon’s revenue growth accelerated to a year‑over‑year increase of 9.2 % in Q3 2025, driven by heightened demand for risk‑management consulting and analytics services. However, analysts have flagged potential scalability constraints:
| Factor | Observation |
|---|---|
| Service Capacity | Client‑project backlog has risen to 18 months, up from 12 months in Q2. |
| Operational Costs | Personnel expense grew 12.3 % YoY, outpacing revenue growth. |
| Digital Transformation | Investment in cloud‑based risk analytics platform increased by $45 million, yet integration with legacy systems remains incomplete. |
The “heavy backpack” of responsibilities—encompassing a wide array of consulting, actuarial, and reinsurance services—creates operational friction. Aon’s management has announced a four‑phase scaling plan focusing on:
- Process Automation: Deploying Robotic Process Automation (RPA) for routine audit tasks, projected to cut labor hours by 18 %.
- Talent Acquisition: Expanding the risk‑analytics workforce by 25 % to support digital offerings.
- Partnerships: Forming alliances with fintech firms to accelerate product delivery.
- Cost Discipline: Implementing a targeted cost‑reduction program aiming at $20 million in operating expense savings over 12 months.
Market Impact
- Investor Outlook: Aon’s price‑to‑earnings (P/E) ratio currently stands at 13.5, below the industry average of 15.8, suggesting potential upside if scalability issues are resolved.
- Competitive Landscape: Firms like Marsh & McLennan and Willis Towers Watson are investing heavily in AI‑driven risk platforms, increasing competitive pressure.
- Regulatory Considerations: Ongoing Basel III reforms may necessitate higher capital buffers for advisory firms, potentially affecting profitability.
Bottom Line for Market Participants
- Geopolitical risk is material: Expect continued volatility in equity and fixed‑income markets; consider hedging strategies and stress testing.
- Canadian pension assets are healthy: Opportunity for corporate sponsors and investment managers to leverage surplus capital and lower liability valuations.
- Aon’s scaling strategy is pivotal: Monitoring execution on automation and talent acquisition will be key to maintaining its competitive edge and justifying valuation multiples.
Stakeholders should integrate these insights into portfolio construction, risk‑management frameworks, and strategic planning to navigate the evolving financial landscape.