Today’s world is in a state of polycrisis. Multinational companies are faced with an accumulation of threats – and opportunities – that are intrinsically linked and moving fast. In this era of uncertainty, it is increasingly important that their insurance partners go beyond paying claims to innovate and create a safer environment for clients wherever they operate and enable them to make strategic choices for the future.
Complex challenges
The most recent AXA Future Risks Report highlighted the complexity of the risk environment and the challenges clients expect to face in the coming years. For the third consecutive year, experts, businesses and the public cited climate change, geopolitical instability and cyber security as the top three risks.
Last year was the third most expensive year on record for natural catastrophe losses. And the magnitude of those is brought into sharp focus when we consider that 2023 was the second most expensive year ever for nat cat.
The cost of cyber crime is growing too. Over the past three years, losses from cyber attacks have increased by about 15% to more than .
And against that backdrop, the shifting geopolitical environment – in which changes seem to happen overnight – is forcing our clients to examine their supply chains, where they operate today and what their structure might be in future.
Clients are making short-term decisions, like changes to logistics, in response to all three of these interlinked challenges. But, perhaps more importantly, these complex risks are impacting the strategic choices they are making for the future.
Anticipating strategic shifts
This is a changing world, which requires companies to adapt, but as well as risk there is opportunity. We are seeing some clients move investment from certain territories to others, in response to the changing geopolitical climate, for example. Many are taking a “regionalisation” approach, rather than a “globalisation” stance that might previously have characterised the strategy of many multinational companies.
Our role is to support our clients through both the short-term challenges and the longer-term strategic changes and to help ensure the overall sustainability of the economy. Our expertise in political risk, trade credit, war, terrorism and political violence, for example, enables us to provide immediate answers to some of the challenges our clients might need to address.
But in addition to proving coverage for known, quantifiable risks, the vision we have of the evolving trends, the interactions we have with different players in the economy around the world, and the meaningful and actionable data that we accrue means that we are in a position to help clients understand how these evolving risk patterns will affect them.
Multinational learnings
The changing environment means that, perhaps more than ever before, our international clients need to understand the business context and cultural nuances of the regions and countries in which they operate.
When designing our multinational programmes, we spend a lot of time working with local offices and network partners to develop our knowledge of both the legal and regulatory environment and the economic and cultural specifics of different markets.
This enables us to help our clients to contextualise their risks. The nature of those risks, and the cost of claims, can vary greatly depending on the territory. Our international presence and on-the-ground expertise gives us insights into the different liability and legal environments around the world, as well as the social and cultural factors that play into the claims picture.
For example, the European Medical Agency has very different requirements for companies carrying out clinical trials than does the Food & Drug Agency in the United States. Our knowledge of the differing legal environments in which our clients operate enables us to help provide programmes that respond to the risks they might encounter.
Innovating for the future
It’s clear that risks do not stand still. The pace of change and the complex, interlinked and evolving nature of the risks – and opportunities – our clients are seeing means that we are constantly looking for ways to innovate.
Technological solutions like those developed by AXA Digital Commerce Platform (DCP) have enabled us to help clients gain real-time risk insights during the devasting Los Angeles wildfires, for example.
Our ability to use geospatial technology and geo-footprinting helps us give more precise information to our clients to help them proactively manage risks. The understanding we can derive about the exact location of assets means that we can better model risks; if we can give a client the insight that moving a factory door by a few metres might dramatically reduce their exposure to flash flooding, for example, we can help them to better mitigate their risks and reduce losses.
This is, of course, all part of our mission to go from payer to partner, helping our clients to manage their risks and be able to make informed, risk-based strategic decisions.
And that principle of partnership holds true after an event too. Our work in the area of cyber risk in not just helping clients to put plans in place to prevent risks but to manage the aftermath of incidents is vital in reducing the overall cost of attacks and building the resilience of our clients to this changing risk, for example.
And innovation doesn’t just apply to technological risk solutions. We know we need to innovate in the way we train our colleagues, because many of the client challenges they will be working to try to manage and mitigate are risks for which there is not historical data and where new expertise will be needed – like carbon capture, for instance.
Always moving forward
A changing climate, geopolitical instability and the ever-changing cyber threat are not only affecting the risks to our clients’ operations, they’re also affecting the strategic choices those clients are making now and for the future.
Innovation is fundamental. In this constantly changing environment there is no room for complacency. It is our purpose to provide solutions to the challenges that our clients face today and will face tomorrow. Our ability to engage in projecting and anticipating risks means that we can, collectively, create an environment that is safer for our clients and the ecosystem in general.
Our role as a partner, not simply a payer, has never been more important as clients large and small, address decisions about where and how to invest and expand, how to build the resilience of their supply chains, how they themselves are structured and much more.
