A new report by Willis, a WTW business, suggested that aviation companies may be underestimating the insurance implications of emerging risks, with many struggling to define or prioritize the threats they face.
The report, "Understanding Emerging Risks in the Aviation Industry," draws on the views of 130 senior aviation representatives and highlights the growing demand for more tailored risk transfer solutions.
According to the findings, only half of respondents said their business model and strategy are resilient in today’s risk environment. Just 30% believe their current strategies will remain fit for purpose over the next decade. Nearly half were unable to identify their organization’s top five emerging risks, and most could not define what qualifies as an “emerging risk” in their company.
The lack of clarity and preparedness has direct implications for insurance, particularly as aviation faces rising exposures from climate change, geopolitical volatility, cyber threats and artificial intelligence.
Geopolitical and economic uncertainty was one of the most frequently cited risk categories, appearing in the top five across all time horizons. Respondents pointed to financial shocks, sanctions, shifting government policy and political instability as threats to operations and investment. These risks were also identified as the most interconnected, amplifying exposure across other categories.
Insurance gaps were raised in this context, suggesting that the available economic risk transfer solutions are falling short of industry needs. Respondents indicated an appetite for more responsive insurance products that reflect the increasing complexity of risk.
Climate-related risks were also prominent. Almost a third of respondents placed climate change among their top five emerging risks, with environmental factors rising in significance over longer timeframes. The sector’s vulnerability to climate transition risks underscores the growing need for coverage that addresses both physical damage and transitional liability exposures.
Cyber threats continue to challenge aviation companies, with 11% of respondents identifying them as the most pressing risk today. This is compounded by the sector’s role as operator of critical infrastructure, making it a key target for cybercriminals. Cyber risk also emerged as one of the top concerns over five- and 10-year outlooks, with increased interconnection to emerging technologies.
Artificial intelligence presents a dual risk. While 36% identified AI as the top current risk, it fell out of the top five in future projections. Some executives noted concerns about deploying AI without sufficient risk controls, while others warned of the consequences of inaction.
One area of focus is AI’s potential to analyze frequent minor incidents that lead to attritional insurance claims, estimated to make up as much as two-thirds of aviation insurance payouts annually. There is growing interest in how insurers and aviation companies can collaborate to reduce the frequency and severity of such claims through data-led tools and predictive modelling.
The aviation industry’s structure, characterized by regulatory oversight and a history of sharing data for safety, positions it to benefit from the development of sector-specific insurance products. If successful, AI-driven loss prevention and data-sharing initiatives could lead to broader risk reduction across the sector, rather than isolated gains for individual operators.
John Rooley, CEO of Willis Aviation & Space, said the industry must update its approach to risk management and insurance planning in light of mounting pressures.
“The challenges we face today in the aviation industry—whether it’s the business implications of AI, cyberattacks, supply chain disruption or climate transition—demand a re-evaluation of how we perceive and manage emerging and interconnected risks,” Rooley said.
He noted that while the industry is accustomed to long-term planning around fleets, infrastructure and regulation, it is less prepared to manage the fluid nature of emerging risks. “There’s a clear need to align risk planning with insurance strategies that are more adaptive and forward-looking.”
