Economic uncertainty created by the protectionist trade policies of Donald Trump and other world leaders has been named the top risk to Irish businesses in 2025 by Aon Ireland.

The potential introduction of tariffs and other barriers to trade was the leading risk ahead of climate change, geopolitical instability, artificial intelligence, and regulatory changes.

“While Irish businesses have navigated challenges well in recent years, a heightened state of volatility is set to become the new normal this year", said Peter Brady, head of risk capital at Aon Ireland.

“In this increasingly complex environment, defined by major shifts across the areas of trade, technology, weather and workforce, leaders should expect the unexpected."

The Central Bank has said the risks created by growing protectionism could have a significant impact on Ireland’s economic model as a small and open international economy, reliant on international trade.

IMF chief Kristalina Georgieva has also warned that the global economy is at risk of an economic slowdown, due to the shifting international environment.

Leaders will need to ensure they have a clear strategy to manage these challenges and grow and protect their business in 2025, according to Aon.

In recent weeks, we have seen the wildfires in Los Angeles and the ongoing fallout from Storm Éowyn in Ireland, providing a firm reminder of the threat to business from extreme weather.

Aon said that business leaders must be increasingly conscious of climate risk and take action to prepare

Data and analytics tools can support companies shape decision-making around the issue of weather and climate risk, enabling them to develop strategies to close the protection gap in 2025.

Geopolitical instability has also emerged as a top concern for businesses and has the potential to affect supply chains and other business-critical functions.

According to findings from Aon’s Global Risk Management Survey (GRMS), supply chain risk or disruption failure is one of the top three current risks facing firms in Ireland.

The disruption of shipping routes through the Red Sea is evidence of increased geopolitical volatility, and firms may need to consider how to enhance the security of their supply chains to support continued growth.

Businesses will also have to identify and mitigate against risks from digital disruption as AI increasingly becomes a key component of their innovation strategies.

Nine in 10 (94%) Irish businesses are enacting a plan or reviewing processes to mitigate against cyber risk this year, according to Aon’s GRMS.

Finally, the implementation of the EU AI Act and the expanded rollout of the Corporate Sustainability Reporting Directive (CRSD) are expected to provide businesses to enhance their future competitiveness and meet the growing demands of investors, customers and other stakeholders for stronger ESG reporting.

However, they are also set to create additional complexities and challenges in the short term.

Given the seismic change required to prepare for some of this new legislation, Aon said it is critical that leaders are agile and act early to prepare for the landmark changes ahead.

Photo: Peter Brady. (Pic: Supplied)