2025 Client Trends
May 2, 2025 13 mins
Trade Issues Confront Global Businesses on Multiple Fronts
Global business leaders highlight risks linked to trade as some of their top concerns — both physical and financial. While the topic is complex and broad, there are opportunities that business leaders can pursue to stay ahead of emerging trade dynamics.
Key Takeaways
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Trade remains under attack on a variety of interconnected fronts, with geopolitical concerns, the impact of tariffs and global trade wars still top focus areas for businesses in 2025.
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Opportunities, however, exist despite growing uncertainties, including a more cautious and strategic M&A outlook.
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Businesses can prepare for future volatility by using a variety of risk transfer solutions to mitigate trade risks.
Harnessing Opportunities Amid Trade Turbulence
Trade is the lifeblood of the global economy. But due to its breadth and scope, it unsurprisingly faces several significant challenges — often interconnected and mutually reinforcing — including global trade wars, geopolitical instability, increasing economic tensions, inflation, climate change, currency fluctuations and people availability. Together, these create a complex and volatile global trade landscape for business leaders to navigate.
Trade Trends: Today and Tomorrow
All of the top 10 risks identified by business leaders in Aon’s latest Global Risk Management Survey have implications for global trade, with six directly linked:
- Business interruption
- Economic slowdown/slow recovery
- Supply chain or distribution failure
- Commodity price risk/scarcity of materials
- Damage to reputation/brand
- Increasing competition
Movement of Goods and Commodities
Geopolitical instability remains a top concern for businesses. With tariffs igniting volatility and uncertainty, the increasing threat of prolonged trade wars, fragmented societies and protectionism are front of mind.1 Trade between geopolitically distant economies accounts for nearly 20 percent of global goods trade, but close to 40 percent of trade in globally concentrated products.2
“Geopolitical issues remain the primary issue in our global supply chain,” says Global Risk Consulting Leader Richard Waterer. “They’re reshaping trade channels, resulting in less availability of certain products and commodities. This causes price increases and is central to significant global tension.”
Uncertainty around the scope and scale of tariffs is high, contributing to added global trade tensions.3 The potential impact of intensifying global trade wars weighs heavily on business leaders with tensions between the U.S., China and the EU among the top geopolitical challenges in 2025.4
Navigating Climate Regulations
Meanwhile, climate obligations are an increasing focus for businesses moving goods and commodities globally. Maritime regulation introduced in 2020 requires ship owners and operators to decrease sulfur emissions by 85 percent. New cleaner fuel can be over 25 percent more expensive, representing a direct financial impact on businesses’ bottom lines.5 The combination of new regulations and heightened stakeholder scrutiny has the potential to create new reputational exposures and financial impacts — issues that are expected to deepen as companies look to tackle the climate crisis.
"The intersection of supply chain and reputational risks poses a unique potential threat to both an organization’s profitability and brand equity,” says Ladd Muzzy, Global Reputation Risk practice leader. “Quantifying the financial reputation exposure has been a keystone to better supply chain and business decisions.”
An Outlook on Movement of Goods and Commodities
Supply chain risk is complex, multi-faceted and costly, with disruptions significantly impacting both business and financial performance.
Looking ahead, organizations need to consider enterprise risks associated with their supplier location strategy, including political risk and terrorism, corruption and bribery, and risks related to weak legal and regulatory controls.
Geopolitical risks will remain a significant concern for international businesses, especially where they are reliant on supply chains with exposures to volatile regions and sea lanes.
“Geopolitical tensions and an increasingly tense and fragmented geopolitical landscape are top concerns for global businesses because they represent a potential source of vulnerability to supply chain disruption risks,” says John Minor, Structured Credit & Political Risk practice leader. “Escalating trade wars, with the potential to lead to trade restrictions, sanctions and counter-sanctions, have the potential to complicate supply chains for many clients.”
Currency exchange fluctuations, inflation, near-shoring, climate issues and the availability of qualified people are all interconnected and impacting trade right now.
M&A Dynamics
The fluid global trade landscape is a significant driver of mergers and acquisitions (M&A) activity and will figure prominently in the strategies adopted by strategic and private equity buyers and sellers.
Macroeconomic volatility and increasingly complex regulatory regimes have affected M&A market dynamics over the past two years and, despite momentary post-election enthusiasm, have returned as headwinds. Access to capital and liquidity remain challenging, with elevated interest rates making the cost of borrowing more expensive.
In the current economic and regulatory environment, heightened volatility is being driven by a combination of global uncertainty, tariff-driven trade wars, inflationary pressures, shifting interest rates and evolving tax and regulatory landscapes.
These factors have created an atmosphere where valuations are shifting, and buyers and sellers are more cautious and strategic in their approach to M&A. However, deep pipelines of targets for sale and significant amounts of dry powder remain important underlying fundamental reasons why M&A activity should rebound quickly from this period of trade-related volatility.
Challenging deal conditions continue to limit options for how sellers approach the exit process. With unpredictable economic conditions, many are prioritizing financial stability and the likelihood of a smooth transaction.
Corporates, with their strong balance sheets and ability to weather economic turbulence, have emerged as the most preferred buyer targets, particularly over private equity buyers who may be facing greater difficulty securing financing due to tighter credit conditions and fundraising difficulties.
This shift underscores the need for sellers to align themselves with buyers who offer more certainty, reducing the risk of deal disruptions. We expect secondaries to continue to provide a vehicle for liquidity for financial sponsors, which will mitigate the liquidity issues.
Aon Capabilities
Thorough Due Diligence Prevails
At the same time, due diligence remains a critical focal point for both buyers and sellers. There is a higher risk of post-transaction complications or regulatory uncertainty in today's environment, making it essential for buyers and sellers to engage in more thorough due diligence. This process helps uncover potential risks, such as changes in market conditions, shifts in customer behavior, or evolving regulatory compliance requirements, all of which can significantly impact the post-deal success of an acquisition.
Executives should embrace deeper due diligence efforts across key risk areas, including tax, cyber security and workforce optimization. Where initial reviews can give a broad sense of the risks facing a transaction, in-depth due diligence is necessary to delve into the broad spectrum of potential liabilities facing a deal, which include operational capabilities, compliance, sustainability and inconsistencies in supply chains. A robust risk transfer strategy that leverages transaction insurance capital, such as representations and warranties or warranties and indemnity insurance, tax insurance and contingent risk insurance, should also be developed to de-risk transactions.
Global growth was projected at 3.3 percent in both 2025 and 2026, below the historical average of 3.7 percent, according to the World Economic Outlook.6 In Aon’s ABCs of Private Equity M&A report, 44 percent of respondents predicted sales to corporates over the next 12 months as the largest volume of company sales. These buyers are seen as reliable and willing to pay a premium for acquisitions. Secondaries closely followed, with 32 percent favoring this increasingly popular method of realizing liquidity.7 Secondaries offer a reliable alternative in times of market volatility and macroeconomic uncertainty. While these points of view appear out of sync with current volatility, these fundamentals can drive a quick M&A recovery as stability returns.
Deep pipelines of targets for sale and significant amounts of dry powder remain important underlying fundamental reasons why M&A activity should rebound quickly from this period of volatility.
Despite evolving risks, opportunities will emerge in sectors that are less affected by these areas of concern. Businesses less reliant on global supply chains, energy and infrastructure companies and technology companies that are part of the growth of artificial intelligence appear to be likely areas of focus.
How Businesses Can Prepare for Change
There are three opportunities businesses need to consider when navigating global trade risks.
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Opportunity 1: Build a Singular Supply Chain Strategy
Building visibility into the supply chain is the cornerstone of mitigating risk. A single strategy for supply chain risk is about a single version of the truth — a taxonomy of supply chain issues that the firm agrees they face consistently and, most importantly, a singular understanding of possible outcomes.
Harnessing data and analytics to build transparency around your most important suppliers, their geographic location and their dependency on third parties will be critical as risks evolve. Awareness of the costs of supply chain failures will help leaders take proactive steps to invest in mitigating existing risks and their potential impact.
“From a risk strategy point of view, it starts with an understanding of where the risk is in the supply chain and quantifying it,” says Waterer. “If you have a picture of your top risks and an understanding of your level of exposure, that will frame the decisions that you want to make as an organization, informing an appropriate balance of risk and reward.”
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Opportunity 2: Leverage Data and Analytics
While the economic outlook can impact when and how businesses exercise their capital, whether through internal investments — such as risk management — or external transactions — such as M&A activities — data and analytics will remain the bedrock of better decisions. We have seen this help in three scenarios:
- The company already has information on its supply chain. It hopes to revisit its insurance program to see what kind of coverage is in place and if it can cover the losses the company may incur due to an interruption from a third-party supplier.
- The company is uncomfortable accepting its current level of risk and wants to enhance risk management. Data and analytics can support the assessment of supplier risk and the auditing of supplier risk management. This includes understanding levels of supplier utilization and determining fallback positions in the event of an interruption. This type of analysis helps companies decide whether they need to adjust their supply chain risk management, like identifying a dual source supplier.
- The company has recognized that the risk exposure is significant. Therefore, they address it in the supply chain strategy by bringing production closer, changing suppliers, assessing deal sourcing, inventory management or holding more stock.
“Supply chain risk management should be truly enterprise-wide, connecting risk and insurance professionals with senior directors in supply chain, procurement, treasury, strategy and operations, around a common set of data and decision making,” says Derrick Oracki, managing director and actuary in Aon’s Global Risk Consulting practice.
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Opportunity 3: Use Insurance Risk Transfer
Specialist solutions are critical in helping organizations navigate volatility and mitigate the risks inherent in trade through supply chain risk management. They can also help facilitate the pursuit of complex M&A transactions. Data-driven insights allow leaders to make informed decisions about material risks and how to address potential exposures.
“Our insurance markets are adept at accepting risk transfer of known and unknown risks, including tax and contingent risks and breaches of reps and warranties, which allows a more economically efficient structure to protect a buyer and a cleaner exit for a seller,” adds Blitz.
In response, supply chains may shorten as more businesses consider the use of nearshoring as an operational strategy to overcome evolving supply chain risks. Data will be central to decision making. Improved insights around where and how risk impacts the supply chain can help inform business leaders as they prepare for unplanned events and volatile supplier performance.
Aon Capabilities
Aon's Capabilities
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Risk Analytics
Every global business is navigating an increasingly complex and volatile trade landscape, making it harder to grow and maintain operational resilience.
Risk analytics allow organizations to identify emerging challenges and new opportunities for transformation.
Aon’s risk management and risk financing teams use analytics to give leaders and risk managers the insights they need to make better decisions on managing the total cost of risk and implementing effective trade risk mitigation strategies via tools that include:
- Captive feasibility studies
- Claims analytics
- Collateral review
- Cyber risk modeling
- Industry loss rate benchmarking
- Loss reserving and forecasting
- Reputational risk modeling
- Risk appetite modeling and retention analysis
- Risk diagnostics tools like CyQu and Spectrum
- Risk transfer program design, stress testing and funding
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Crisis Management
In today’s volatile environment, organizations must navigate an increasing number of interconnected risks while making decisions that impact their customers, employees and balance sheets.
Aon’s Global Crisis Solutions team helps businesses prepare for crisis events by providing consultative risk mitigation and placement strategies. This, combined with crisis response expertise, helps enhance clients’ ability to prepare for, navigate and respond to a crisis, while minimizing organizational disruption and damage.
Aon addresses risk in the following areas, providing local guidance where appropriate:
- Political risk and structured trade credit
- Supply chain disruption risks
- Product recall and product contamination
- Terrorism and political violence
- Kidnap and ransom
- Contingency
- Media and entertainment
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M&A
While the M&A world is currently dealing with heightened volatility driven by macroeconomic, regulatory and geopolitical headwinds, underlying demand from deep pipelines and significant dry powder should allow for quick resumption of activity once the environment becomes less uncertain.
However, many transactions will be considered during the current period, and dealmakers will need specialist partners who understand their goals and bring robust knowledge of deal sourcing, transaction processes, risk management and investment strategies to the table.
Aon provides specialist solutions and capabilities across the entire deal lifecycle to deliver optimal deal and business outcomes:
- Transaction solutions, including: representations & warranties/warranty & indemnity insurance, tax insurance, litigation insurance, credit and surety solutions and contingent risk solutions
- Enhanced due diligence
- Understand and unlock intellectual property value
- Cyber risk management
- People, rewards, change and communication
- Portfolio and capital strategy
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Trade Credit Solutions
Businesses are facing myriad economic challenges as new forms of volatility impede business operations and change consumer and employee expectations:
- Rising investment risks
- Changes in buyer behavior
- Evolving regulatory requirements
- Ensuring financial strength
- Shifting trade dynamics
- Securing new growth areas
Leaders can secure an edge over competitors by leveraging comprehensive credit solutions. Using a triple-pronged approach of credit insurance, political risk insurance and surety services, Aon can help businesses unlock capital while developing sustainable growth strategies.
Capabilities
Through our global expertise across two key areas of need ― Risk Capital and Human Capital ― our clients are better advised within, and across, their risk and people strategies.
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Capability Overview
Risk Analytics -
Product / Service
Crisis Management -
Capability Overview
Mergers and Acquisitions (M&A) -
Product / Service
Trade Credit Solutions
1 Global Risks 2025: A world of growing divisions, WEF
2 Geopolitics and the geometry of global trade, McKinsey
3 Threat and Uncertainty of US Tariffs Both Pose Risks to Mexico, Fitch Ratings
4 As
2025 Begins, CEOs are Most Worried About a Trade War and Recession, The Conference Board
5 How can fuel insurance support companies’ transition to cleaner fuels?
6 Global Growth: Divergent and Uncertain, WEO
7 ABCs of Private Equity M&A Report, Aon
General Disclaimer
This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.
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