Aon’s Digital Economy Chief Commercial Officer Benjamin Hindson explores some of the key risks facing mobility businesses in 2024.
Article written by Aon and published by MOVEMNT The risk environment for the mobility sector continues to grow in its scope and complexity. Whether dealing with global supply chain issues against an increasingly fraught geo-political backdrop, or managing a shortage of talent in critical areas like digital and data, mobility businesses cannot afford to be complacent when considering the risks that could derail their operations. While Aon’s recently published 2023/24 Global Risk Management Survey – which identifies the top risks impacting organisations across all sectors – finds that cyber attack is the number one risk, it’s important to take a closer look at some of the other top risks that mobility organisations will need to manage and mitigate throughout 2024 and beyond.1. Commodity Pricing/Scarcity of Materials
Amongst these top risks is the growing challenge of sourcing the new materials needed. By the end of the decade the demand for lithium – a critical material for battery producers – is expected to more than double to over 4 million metric tons. Given the importance of lithium for electric vehicles, some commentators such as the International Energy Agency have warned that the global economy has already seen periods – 2021 and 2022 – when the supply of lithium was not able to keep up with demand, leading to some EV OEMs facing insolvency due to uncertainty around their battery supply. To try and introduce more certainty, some countries have introduced state aid to guarantee battery supply, such as the US with a US$3 billion funding programme for battery production. But many of these facilities will take time to come online and, in the meantime, the risk of not being able to source the batteries needed will grow.2. Supply Chain and Distribution Failures
Another key risk – and one closely linked to the shortage of materials – is the growing complexity of the supply chain. In addition to areas like battery production, the availability of components such as microchips is just as critical and can be interrupted by anything from transport issues, to a political risk problem in the chip producing country. As vehicles become increasingly complex, and new technologies are added, OEMs need to access new components where they may not have had as much experience. Governments are again stepping in by looking at ways they can domesticate critical parts of the supply chain to make supply less vulnerable to geo-political events.3. Talent Wars
Of course, good businesses need more than just parts and materials to make their products and the human talent requirements for the mobility sector are rapidly shifting. For businesses to continue to innovate and meet their customers’ demands and expectations, and understand their challenges, they need access to a talent pool wholly different to the skillsets needed less than a decade ago. As mobility gets more digital, employees with those skillsets are at an absolute premium. Whether it’s data scientists or software engineers, the demand for these different skills means it is critical, for example, that mobility businesses carefully consider that where they build their facilities has ready access to the right talent pool with a healthy pipeline of future talent. And that they develop an attractive employee proposition that can compete with all the other industries also on the hunt for similar skillsets.4. Regulatory and Legislative Changes
Regulatory risk is also rapidly changing, and mobility businesses will need to make sure they are in a position both to meet their regulatory requirements but also take advantage of the possible opportunities that regulatory changes could offer. It’s expected that the UK government will firm up legislation around micromobility soon which will have an impact on e-scooter and e-bike providers, while the Automated Vehicles Bill currently making its way through parliament in the UK will also create new opportunities for autonomous vehicles. In addition, mobility businesses will need to continue to have a careful eye on privacy issues given the amount of data they are collecting when it comes to areas like users’ movements. As custodians of huge amounts of personal data, maintaining compliance and protecting personal information in the right way will continue to be a high priority in terms of risk mitigation.5. Brand and Reputation
Aon’s Global Risk Management Survey regularly reports loss of brand and reputation as a top risk due to the adverse impact a negative event can quickly have on the value or even survivability of a business. Emerging mobility technologies are particularly susceptible to damaging headlines if a battery explodes or an autonomous vehicle hits a pedestrian. It might be that they experience far less adverse issues than their more traditional mobility counterparts but, until the technologies become more commonplace, expect any problems to attract a disproportionate share of negative media coverage.6. Failure to Innovate
Another top risk for mobility is a failure to innovate. Customer expectations and needs in the mobility space change rapidly and the risk of not evolving to meet those needs can quickly leave businesses behind. This is no small challenge, given it can take as much as seven years to take a vehicle from design to production and a lot can change in that time. A focus on creating agile businesses that can be more responsive to customers’ demands will help the mobility sector mitigate this potential risk.Risk Mitigation and Management is Critical
It’s likely that all these top risks will continue to evolve and change, and be joined or overtaken by others which means it’s critical that every business in the mobility sector, wherever it is in its growth journey – from startup to venture funded and beyond – has a clear perspective on its key risks and a clear plan of risk mitigation and management. The 9th edition of Aon’s Global Risk Management Survey is now live. To discuss your business’s risk management and how to use insurance to enable your growth strategy, talk to Aon today. Aon provides future mobility businesses who are experiencing differentiated challenges because of their business models – with new solutions to solve for their emerging needs. From those looking to evolve mature business models to those driving rapid growth from a start-up, we are a partner supporting a client’s growth cycle, helping them to make better decisions to protect assets, attract and retain the best talent and control risk. The 9th edition of Aon’s Global Risk Management Survey is now live. To discuss your business’s risk management and how to use insurance to enable your growth strategy, talk to Aon today. Aon provides future mobility businesses who are experiencing differentiated challenges because of their business models – with new solutions to solve for their emerging needs. From those looking to evolve mature business models to those driving rapid growth from a start-up, we are a partner supporting a client’s growth cycle, helping them to make better decisions to protect assets, attract and retain the best talent and control risk. Contact Benjamin Hindson Benjamin.hindson@aon.co.ukWhilst care has been taken in the production of this article and the information contained within it has been obtained from sources that Aon UK Limited believes to be reliable, Aon UK Limited does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the article or any part of it and can accept no liability for any loss incurred in any way whatsoever by any person who may rely on it. In any case any recipient shall be entirely responsible for the use to which it puts this article.
This article has been compiled using information available to us up to 22/01/24.
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