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Navigating a changing risk landscape: Key findings on risk management in manufacturing and automotive

We examine how companies are enhancing risk management strategies to build resilience amid geopolitical, supply chain, and regulatory challenges.

07/18/2025 · 6 minute read

Fluctuating global markets, shifting trade policies, geopolitical tensions, and evolving regulations can create a complex risk landscape and significant uncertainty for manufacturing and automotive companies. The fast-changing, intersecting challenges may put increased pressure on senior leaders to make changes to their insurance and risk management strategies with the goal of building more resilient organizations.

Success can require that organizations reevaluate their current way of managing risk and shift towards a more integrated view that engages a broader range of stakeholders to more effectively address emerging threats.

Evolving challenges in a volatile environment

Macroeconomic pressures are expected to continue weighing heavily on the manufacturing and automotive industry. Close to 70% of respondents to a joint survey carried out by Marsh and Mercer believe that trade policies will be their top business risks in the coming 12 months, followed by economic uncertainty and geopolitical concerns (see Figure 1).

Figure 1: Key risks facing the manufacturing and automotive industry

Business risks in the next 12 months

These challenges are compounded by myriad operational risks that continue to put pressure on the industry. Cyber threats topped the list of concerns that organizations expect to face in the next 12 months, followed by supply chain risks and business interruption challenges (see Figure 2).

Figure 2: Operational risks of high concern

Operational risks in the next 12 months

Supply chain challenges have long been a pressing concern for manufacturing and automotive companies. These issues came under increased scrutiny earlier this year, when the introduction of tariffs and counter-tariffs added a new layer of risk. For manufacturing and automotive companies that depend heavily on a vast network of suppliers, any disruption to their supply chains can delay production, creating significant financial burdens and potential contractual liabilities if they are unable to meet production schedules.

It should be noted that survey field work was taking place around the time of tariff announcements, with continued changes in tariff policies and resulting disruption concerns potentially impacting survey responses.

Industry requires innovative risk approaches

The evolution of risks and emergence of new challenges may put traditional risk management practices to the test, leading some manufacturing and automotive businesses to reevaluate their traditional strategies. Changes to conventional methods that may no longer effectively address the complexities of modern risks, for example, could be beneficial.

For example, a key strategic priority for the industry is to improve cost efficiency and margins (see Figure 3). But this is unlikely to take place unless other risks are also addressed. Retaining and hiring critical talent, another top priority for our survey respondents, can be vital to achieving these goals and building resilient organizations, especially as the industry continues to adopt new technology and automation processes.  

Figure 3: Strategic priorities for manufacturing and automotive companies

What are your company’s top strategic priorities over the next two to three years?

Confidence amid uncertainty

Despite the number of risks facing the industry, a significant portion of respondents expressed confidence in their risk management and insurance strategies. Approximately 90% of respondents expressed confidence in their current frameworks, indicating a strong belief in their ability to navigate the evolving landscape (see Figure 4).

Figure 4: Confidence in risk management strategies

How confident is your organization in its current risk management and insurance strategies?

Addressing risks effectively and building resilience often requires an organization-wide approach to identifying, quantifying, and managing both evolving and emerging risks. However, our survey showed that a relatively small group of stakeholders are involved in risk and insurance strategies, with finance and treasury as well as C-level executives having the most involvement (see Figure 5).

Figure 5: Stakeholder involvement in risk management

To what extent are the following groups in your company involved in risk and insurance strategies or decisions?

Let’s take one example — less than a third of operations teams have a high or significant involvement in risk and insurance strategies, even though a number of operational concerns are among the top challenges survey respondents expect to face over the next 12 months. Similarly, while our survey showed that talent risks are among the main concerns for manufacturing and automotive companies, responses indicated that human resources teams are not usually extensively involved in risk and insurance strategies. This raises an important question: Why are other functions within the organization not engaged in these critical discussions? The exclusion of key stakeholders could lead to the impact of these significant risks not being effectively evaluated, which may ultimately jeopardize the organization’s resilience.

A new approach to risk management

To more effectively address the changing risk landscape, organizations may adopt a more holistic approach to risk management. This includes exploring innovative insurance solutions, which is already taking place. Our survey found that a third of respondents are considering the use of captives, while over a fifth are exploring integrated, structured, or alternative risk programs (see Figure 6). This suggests a shift towards more proactive risk management and a willingness to adapt and innovate in response to a changing risk landscape.

Figure 6: Actions to address insurance market challenges

Which of the following actions has your company taken or plans to take, to address insurance market or budget challenges?

But effective change is unlikely to happen unless manufacturing and automotive companies make the effort to involve a wider range of stakeholders in their risk management and insurance decision process.

Further, organizations may benefit from a concerted effort to move away from an approach that focuses primarily on risk transfer. Instead, risk managers may want to position themselves as strategic advisors. This transformation involves creating forums for dialogue and collaboration among stakeholders, with the goal of considering many perspectives as they develop risk management strategies. By elevating the role of risk managers, organizations can become better positioned to identify new risks that are already impacting the businesses and challenges that might be around the corner.

Alternative risk transfer programs, including integrated and structured programs and captives, can help organizations supplement traditional insurance programs, but organizations must also recognize they may not be standalone answers. Instead, they should be integrated into a broader risk management framework that emphasizes resilience and agility. This holistic approach can better enable organizations to navigate the complexities of the modern risk landscape more effectively.

By fostering a culture of open communication among stakeholders across the organization, involving them in risk-related discussions and decisions, manufacturing and automotive companies may be better placed to anticipate and respond to emerging risks. This approach may be critical to building more resilient businesses that are better able to withstand multiple challenges and remain competitive in a difficult environment.

Our people

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Lisa Caldwell

Commercial US Manufacturing and Automotive Industry Practice Leader

  • United States

Geoffrey Smith

Geoffrey Smith

Gulf Coast Growth and Office Leader, Mercer

  • United States

Falak Kothari

Falak Kothari

Managing Director & Industry Leader, Manufacturing

  • Canada