Risk. Reinsurance. Human Resources.

Expertise– the vital ingredient

Aon Risk SolutionsNational | Food & Drink Practice

Today’s growing challenges for the Food & Drink sector

Industry change drivers from regulatory to sustainability, to mounting pressure for owners to stay in business, to increasing product recalls and supply chain complexity – these are issues that impact food and drink companies and affect their business from a risk standpoint.

Standard cover might have been more appropriate five years ago, but the food and drink sector has experienced a number of new evolving risks, which necessitates the need for bespoke cover.

Traditional risk areas such as public liability, product liability, employer’s liability, and business interruption are growing in complexity, while evolving risks, such as commodity price rises*, reputation and brand damage, product recall, supply chain disruption, regulatory change, and environmental risks create a greater duty of care and add to the burden and cost of insurance and risk management.

It is important that any insurance programme translates to these traditional and evolving risks in order that your business can meet stakeholder expectations.

*Commodity price rises was ranked no.1 risk in the Aon Food & Drink Risk Survey (conducted in Q4 2012 , the web-based survey gathered input from 132 respondents).

Our clients represent all aspects of the food and drink value chain: from growers and suppliers to manufacturers and processors; from wholesalers and retailers, to hospitality and leisure operators.

Food & Drink sector: current and emerging industry risks

The Aon advantage:Solutions serving the entire food and drink value-chain risk continuum. Non-traditional risk / risk issues

Traditional risk / standard cover

Compliance

Operations

Reporting

Strategic

PandemicEvent

ObesityChallenge

Livestock/Crop

CrisisManagement

& BusinessContinuityPlanning

Vulnerability of Supply Chain

Sustainability

Malicious/Accidental

Contamination

Reputation &Brand Damage

CommodityPrice & Volume

Weather &Climate Change

RegulatoryChange

Health & Safety

ITDependency

Unions

BusinessInterruption

EmploymentRelated

Property

Public & ProductLiability

Executive Risk

Employers liability

Expertise you can trust

Our knowledge and expertise comes from working with a wide range of companies in the food and drink sector; we advise many of the leading food and drink companies and brands in the UK and globally.

With such a wide cross section of clients, you can be confident in our understanding of the risks you face. We work closely with the reputable insurance markets that you would expect, have access to a large group of food and drink sector experts and specialist solutions from across the Aon network.

Our strength in the food and drink sector and portfolio of clients we hold means that we can help you derive relevant

conclusions, understand creative options and strategies to mitigate your risks.

These are just a few of the risks we can help you address:

• Accidental and malicious contamination

• Brand equity damage and reputation risk

• Property

• Business interruption

• Supply chain disruption

• Employment

• Environmental liability impact

• Governmental and regulatory changes

Why we are different

Our consulting and service proposition is anything but standard:• Cover is built around your unique

risk profile not sector standard

• A Total Cost of Risk mitigation approach is taken

• Service driven by specialist expertise

• Innovative tools to help you take advantage of upside risk

• Access to the Aon Global Risk Insight Platform® – the world’s leading insurance information repository

• Dedicated, local, tailored service with access to Aon’s national and global resources

• And the Aon Client Promise®, where your feedback drives our performance

Cover built around

your unique risk profile

Servicedriven by

specialistexpertise

Unmatched programme design

Our experts will:• Assess risk exposures not

typically covered by traditional insurance offerings

• Conduct financial impact analysis and risk prioritisation

• Evaluate solutions that safeguard critical assets

• Develop and implement comprehensive risk management and insurance strategies

• Create solutions to control financial volatility

Helping you prepare for the unexpected.

Comprehensive, integrated risk management solutions

We work with your management team to develop integrated strategies for your business risks, financial needs and people issues.

We build a team to partner with you. Our experienced professionals understand your competitive environment and can assess the challenges and issues you face every day, anticipate your business risks and develop strategies that help achieve your goals and competitive advantage.

Your Aon team will work with your financial, risk and human resource management to challenge your thinking, apply our state-of-the-art tools and help you connect with the right insurance and capital markets provider, products and services – quickly and efficiently.

Our integrated approach allows us to understand your issues from many angles and create robust solutions, including:Property risk control• Bespoke property risk profiling

• Fire

• Fire engineering standards

• Material damage and business interruption surveys

• Managed programmes

Liability risk and loss management• Liability risk profile

• Management systems review

• Behavioural safety programmes

• Training services

• Claims defensibility reviews

• Targeting a claims culture

Motor Fleet risk management• Risk management assessment

• Managing driver risks

• Risk monitoring and reporting

• Insurance programme design options

• Accident and claims management services

• Claims analysis

• Risk control audits

Enterprise risk management • Benchmarking and risk

management reviews

• Brand and reputation management

• Business interruption and continuity management

• Supply chain

• Business continuity

• Pandemic risk

• Corporate governance risk reporting

• Outsourcing risk management

• Bribery avoidance

Additional client tools and services: • AonLine portal – secure online access to

policies and documentation

• RiskConsole – online claims and risk management solutions

• Local seminars and on-site training

Integrated risk management

The result – more powerful and meaningful solutions that support your company resources at a strategic and operational level.

“Irrespective of the catalyst for the product recall, the impact can be devastating for a small to medium-sized enterprise, with long-term implications for profit, productivity and growth plans, share price and of course relationships both up and down the supply chain.”

Kary Yates, Team Leader, Product Recall and Contamination, Aon Risk Solutions

Crisis management: product recall and contamination

Aon’s product recall and contamination team combines prevention, planning, risk transfer and response to ensure you can react quickly and effectively in the event of a crisis – protecting the integrity of your brand.

The impact of a product recall can break a food and drink business, destroying hard earned reputation in days or even hours. It’s a risk that is an intrinsic part of the sector and is constantly changing as supply chains and methods of communications develop.

Our consultative approach helps you quantify and qualify your exposure to the threats of product recall or product contamination, and helps ensure you have a robust and comprehensive strategy around risk retention, mitigation, transfer and management.

Trade Credit in the Food and Drink sector

Credit risk protectionCurrent economic conditions have increased pressure on companies trading on credit terms within the Food and Drink sector.

Poor harvests, rising farming costs and the commoditisation of farm raw materials as an asset class have led to a surge in the price of raw materials which has increased the cost of food stuffs worldwide. The margins and cash positions of weaker companies will be squeezed depending largely on their capacity to pass on price increases to customers.

Who bears the brunt of the price rise in the food processing chain? Processors and retailers can struggle to react quickly to price fluctuations when their relationship is bound by supply agreements that can lock them in for months and even up to a year.

Furthermore retailers often find themselves with limited manoeuvrability to effectively raise prices, particularly with customers in advanced economies facing not only the stagnation, but even the decline, of their disposable income, coupled with the persistence of very high unemployment.

There have been a number of recent failures in the industry and with continuing concerns over the impact of unexpected levels of bad debt, companies need to fully understand their credit risk profile and ensure they have sufficient balance sheet and cash flow protection.

For companies with branches or subsidiaries in different regional locations or countries, there is the added risk that inconsistent credit management procedures can lead to a lack of awareness of your overall exposure to customer failures or politically unstable markets.

Credit insurance covers the risk of non-payment of trade debt. Protection for political and pre-credit risk can also be added if required.

Trade Credit benefits• Protects your P&L and balance sheet against non-payment risk

• Facilitates access to competitive finance and working capital from the banking market

• Underpins your credit management function and supports corporate governance best practice

• Gives security in new markets allowing exporters to grow their business

• Provides invaluable customer insight based on up to date company and economic analysis from credit risk specialists

How Aon can helpFood and drink is one of our core markets and our dedicated and skilled team works with you consultatively to understand your business at all levels ensuring you get the right solutions from our unrivalled capabilities. Our excellent client servicing offering across our National business is reflected by our 94% renewal rate in 2013.

We provide receivables management solutions to enhance your commercial strategy and one of the advantages of our size is our leverage with insurers to bring you the most competitive offering in respect of cover, cost and service.

Analytical and consultancy capabilitiesThe Oracle: The Oracle profiles all policy structures, credit limits and claims within the Aon Trade Credit portfolio. Based on Aon and insurer intelligence, the Oracle is an innovative and unique online database offering invaluable customer insight, which provides potential to secure additional capacity and assist within the strategic placement process for our clients.

Risk analytics: Our risk analysis team give invaluable insight through our credit risk profile reports including key financial data, sector overviews, SWOT analysis and peer comparisons. The aim is to reposition buyer credit risks with underwriters to increase credit limit coverage.

Case study: the insolvency of Waverley TBS The collapse of Waverley TBS left £64.5m in debts to unsecured creditors; with at least seven companies from the drink sector owed seven figure sums. The insolvency of Waverley sourced from a shortfall in credit, tough UK trading conditions and poor summer weather. It’s estimated 196 trade creditors were impacted, the majority of which were drinks companies.

Source: morningadvertiser.co.uk, ‘Waverley TBS falls into administration’, 2 October 2012.

Aon analytics: powerful benchmarking and insurer leverage

Clients want to know how their broker can provide quantifiable value throughout the entire year, not just at renewal time.

Aon’s advantage is the ability to translate powerful benchmarking in to results for its clients. The Aon Global Risk Insight Platform® (Aon GRIP) shows us in real-time the markets competing for new business, targeted industry sectors and whether an insurance programme is best packaged with a single provider or spread amongst a range of insurers. Moving beyond this, Aon GRIP also provides factual benchmarking for our clients to understand how they compare with their industry peers around insurance costs, limits of cover purchased and self-insured excess levels.

Armed with these metrics, we are ideally placed to get the optimal solutions for our clients, and in turn they can be confident that they are paying the right price for the right cover.

Aon GRIP’s web-based business intelligence, risk analysis and market insight enables our brokers to evaluate the optimum value for our clients and strengthens our negotiating position with the market, making sure every conversation is based on the most complete and current set of facts.

®

Your valued partner

Our clients represent all aspects of the food and drink value chain, from supplier companies to food manufactures and processors, to wholesale distributors to retailers, hospitality and leisure.

Everything we do at Aon is focused on partnering with clients to bring distinctive value to their organisation by offering uncommon insight and solutions to the management of their risks. Our food and drink industry clients have found our partnership an essential component.

Our business approachOur intention at Aon is to deliver exceptional service. Our partnership with you will be underpinned by our service methodology that is based on understanding your objectives.

Designed for clients by clients, the Aon Client Promise® is Aon’s globally uniform approach to ensure each Aon client receives personalised service based on their individual business needs.

The four-step methodology, starting with the Aon Client Promise Assessment and ending with the Client Promise Review, creates the industry’s most transparent view of the work we perform, and holds our team accountable for delivering value to the areas of your business where it can have the most impact.

“Following a broker review we appointed Aon and have been delighted with the Manchester team and with the wider resource that we are able to access through them. Their food industry experience, innovation and benchmarking capabilities are impressive and the service that we have received has been excellent. One of Aon’s key aims has been claims management improvement. They have been very keen to help us to target risk management in order to reduce our total cost of risk. In doing this, they have delivered invaluable accident and claims analysis tools to our business. We have just completed our first insurer competition exercises with Aon, and they have generated extensive competition for us. Aon’s approach to helping us to present our risk through their risk prospectus and numerous joint face to face meetings with insurers has helped us to achieve cover improvements, cost savings in excess of 30%, and sustainable pricing for the next few years.”

John Healey, Company Secretary Warburtons Limited

Expert risk consulting each step of the way

We will... provide...

and deliver...

Listen

Challengeyou

Access to experts

Competitor Benchmarking

the risk programme

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For more information:w aon.co.uk/food-drink

About Aon Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon’s global partnership with Manchester United.

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Risk. Reinsurance. Human Resources.