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What businesses must contend with

Published on: Saturday, July 26, 2025 Published on: Sat, Jul 26, 2025 By: Sisca Humphrey Text Size: L/R: Ming, Cecilia and Neil. Kota Kinabalu: Businesses must evolve beyond awareness of climate risk and actively quantify and integrate sustainability into their strategic decisions, said Aon executives during their presentation at the Marim Conference 2025 here. Delivering the opening, Aon's Senior Vice President Ming Hui Lim said the world is confronting a confluence of four 'mega trends' that have created new layers of market vulnerabilities: trade disruptions, technological transformation, extreme weather and workforce shifts. 'To stay anti-fragile, we need to be relevant, resourceful, and resilient,' he said. He emphasised that businesses are generally unprepared for the full implications of shifting global trade policies, while investment decisions remain cautious and supply chains fragile. Lim also spoke candidly about the challenges in technology and human capital, noting that while artificial intelligence (AI) and cloud infrastructure have enhanced productivity, they have also elevated cyber risk. 'In Malaysia, we're seeing heightened exposure among healthcare, real estate and professional service sectors,' he said. He said the presence of four generations in today's workforce also adds complexity. 'Younger employees want flexibility, values, and purpose in their work. If we don't evolve, we won't retain talent, especially given current economic pressures,' he said. Moving on to environmental risk, where Aon's Director for Risk, Climate and Sustainability Cecilia Tse, provided a sobering assessment of business preparedness in the face of climate threats. Referencing the World Economic Forum's Global Risk Report, she pointed out that five of the top ten global risks in the coming decade are environmental. 'Despite this, climate and environmental risks remain among those that businesses are least prepared for,' she said. Cecilia outlined three categories of climate-related risk, which are physical, transition and liability. She highlighted that physical risks include both sudden events like flash floods or typhoons and chronic threats like sea level rise and prolonged heatwaves. Transition risks, meanwhile, stem from changes in law, regulation, customer expectations and technology adoption. 'In Malaysia, regulators are moving,' she said, citing Bank Negara's climate stress testing and Bursa Malaysia's phased climate disclosure requirements. 'By 2027, tens of thousands of companies in Asia-Pacific, including here, will be required to file climate disclosures,' she said. She warned of increasing litigation risks, highlighting concepts like greenwashing (exaggerated ESG claims), greenhushing (withholding climate data), and greenwishing (overstating intent without follow-through). 'Disclosures must be credible, measurable, and backed by clear plans,' Cecilia said. Cecilia urged companies to take the initiative even if they are not currently obligated. 'Early adopters have time to build internal capacity and governance confidence. ESG disclosures must be signed off by boards, so understanding and ownership is critical,' she said. Business Development Leader at Aon's Global Risk Consulting Neil Gravestock, focused on the need for quantifying climate risk. 'Qualitative talk is no longer enough. Regulators and investors want numbers,' he said. Gravestock highlighted that a practical approach, which is start small with pilot studies, such as flood mapping or hazard overlays to build understanding. 'Visual tools like heat maps allow organisations to spot hotspots and trends at portfolio level without needing to model every site in detail,' he said. He cautioned, however, against blind reliance on climate models, which often fail to capture on-the-ground realities such as building design, drainage systems, or the presence of flood barriers. 'A flood model might say a building is underwater, but if the water can't enter the premises, the real risk may be negligible,' he said. One case in point was a plantation study where the floodwater itself didn't damage trees, but prolonged silt deposition around roots posed a bigger threat. 'Understanding these details helps organisations focus resources more effectively,' he said. Looking ahead, Gravestock said advances in AI and quantum computing would significantly improve forecasting and modelling. 'Malaysia is aiming to be a regional centre for quantum computing by 2035, and that will transform how we assess environmental risk,' Gravestock said. He concluded that while climate risks pose threats, they also create opportunities, especially in areas like green chemistry, battery technology, and carbon capture. 'What's coming is a complete shift in how we quantify and navigate risk. And we must be ready,' he said. * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia