Aon Survey Finds Economic Slowdown Is The Number One Risk For South Africa In An Uncertain Global Climate

Ranked #1 Risk for South African Organisations

Economic slowdown ranks as the number one risk for South Africa. Amid trade tensions, inflation and geopolitical instability, organisations must strengthen liquidity, enhance workforce agility and rethink capital strategies to stay resilient.

According to Aon’s latest Global Risk Management Survey findings for South Africa:

78% of respondents suffered a loss due to economic slowdown or slow recovery.Despite the fact, only 35% of respondents have a plan or formal review in place to mitigate the risk. 

Of those:

12% of respondents developed a continuity plan.25% developed a risk management plan.12% of organisations evaluated risk finance or transfer solutions. 

Economic Slowdown and the Challenge for Businesses

The risk of an economic slowdown creates immense uncertainty, which can put companies at a disadvantage and often unable to use tactics they leaned on in more stable times.

According to Aon’s Global Risk Management Survey, Clayton Ellary of risk advisors and insurance brokerage, Aon South Africa, highlights that a slowing economy affects everything from consumer demand to the cost of raising capital, posing considerable risk to profitability. “Liquidity is an essential asset during times of uncertainty; cash reserves enable companies to both ride out dips in revenue and take advantage of strategic opportunities. Regular reviews of risk frameworks and scenario planning also enable companies to anticipate headwinds and build their resilience.”

Businesses are experiencing repeated economic shocks and persistent uncertainty. The South African Reserve Bank has revised its 2025 growth forecast for South Africa to 1.3% at the end of November[1] while the International Monetary Fund (IMF) has projected global growth at 3.2% for the year[2]. These uncertainties are also creating problems for central banks, which now face a more complicated journey in easing monetary policy against a backdrop of rising inflation risk.

Meanwhile, high public debt levels and elevated asset valuations make market corrections more likely[3]. Inflation and potential recession, alongside growing regionalism and decoupling in trade, can increase organisations’ production costs, disrupt supply chains and undermine long-term growth prospects. 

What is the Impact of an Economic Slowdown?

Both consumers and businesses are affected and may have to reevaluate their spending plans. As these groups lose confidence, many could opt to save cash rather than spend, slowing economic growth even further. Additional impacts could include the following:

Weaker earnings and corporate profitability.Potential for job cuts, which can cause a negative self-perpetuating cycle.The need for government intervention to prevent a negative spiral. 

How can Organisations Mitigate the Impact of an Economic Slowdown?

Aon provides six crucial tips for businesses to navigate through the economic slowdown:

Strengthen Liquidity and Capital Flexibility: Maintaining robust cash reserves is critical as businesses are faced with global uncertainty. Prioritising liquidity can ensure that organisations can continue to meet obligations during revenue dips and still capitalise on strategic opportunities such as acquisitions or investments in innovation. 

Assess and Manage Workforce Needs: Shifts in government policy, changes in public spending and potential company restructures can all have wide-ranging effects on labour markets. To maintain agility and minimise disruption, it is crucial for organisations to assess their workforce needs through strategic actions such as skills mapping, reskilling and upskilling to ultimately redeploy talent to high-priority areas. 

Maximise the Value of Your Insurance Program: Organisations should use quantitative analytics tools to test and model scenarios and insurance program options, including alternative risk transfer. This can help businesses optimise their total cost of risk, ensure their program is aligned to their risk appetite and risk tolerance, while redistributing capital that can be invested elsewhere to support growth.  

Manage Risks and Monitor Economic Signals: Organisations should regularly review and update their risk frameworks, stress-test their supply chains and enhance their scenario planning to address the compounding effects of economic, geopolitical and operational risks. Scenario planning and regular reviews of economic forecasts can help management anticipate oncoming economic headwinds. 

Focus on Supply Chain Diversification and Resilience: Global trade tensions and economic uncertainty underscore how important it is for organisations to broaden their supplier base and diversify their customer segments to reduce their exposure to specific markets or regions. 

Use Digital Tools to Maximise Operational Efficiencies: Deployed strategically, automation, generative AI and data analytics can all help organisations boost productivity and relieve cost pressures. These tools help unlock more efficient operations, more informed decisions and faster response times - all of which are integral to navigating tough economic conditions. At this point, the guidance of an experienced broker team can provide valuable support and insight. 

“Moderate economic growth, inflation, high interest rates and trade policy uncertainty are likely to persist in the near term. But organisations can bolster their resilience and set themselves up for long-term success by remaining vigilant, strategic and focused on fundamental best practices,” Clayton concludes.

About Aon

Aon exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues provide clients in over 120 countries and sovereignties with the clarity and confidence to make better risk and people decisions that help protect and grow their businesses. 

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Disclaimer:

This document has been compiled using information which was current and accurate as at the date of publication.  The information contained in this document should not be considered or construed as insurance broking advice and is for general guidance only. Accordingly, the information contained herein is provided with the understanding that Aon, its employees and related entities are not rendering insurance broking advice. As such, this should not be used as a substitute for consultation with an Aon Broker or Consultant.

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[1] https://www.resbank.co.za/en/home/publications/publication-detail-pages/statements/monetary-policy-statements/2025/november[2] https://www.imf.org/en/publications/weo/issues/2025/10/14/world-economic-outlook-october-2025[3] https://www.oecd.org/en/about/news/press-releases/2025/03/global-economic-outlook-uncertain-as-growth-slows-inflationary-pressures-persist-and-trade-policies-cloud-outlook.html