Climate change, geopolitical instability and cyber risk are the top-ranked threats facing clients around the world. Insurers are applying a forward-looking approach to understanding how risks are linked and may evolve to support risk managers in their efforts to increase resilience and adaptability.
Many of the biggest issues on risk managers’ radar are transversal. They are often global in nature, frequently interlinked and even potentially systemic.
The most recent , published last autumn, revealed that the top-ranked risks, according to both risk experts and the general public, are climate change, geopolitical threats and cyber risk. The report revealed a broad consistency of views across regions and industry sectors and backed up the findings of the previous Future Risks Report in which the same three risks dominated the ranking.
We believe that deepening our understanding of how risks are interconnected will give us a better vision of future potential threats and enable us to apply greater foresight to how we work with clients to assess and manage the risks they face today, tomorrow and over the longer term.
Interconnected risks
The recent widespread power outage in Spain and Portugal, for example, highlighted some of the vulnerabilities that local, national and regional economies face as a result of the interconnectedness of systems.
The blackout left people stranded at airports, unable to buy food, forced schools and shops to temporarily close, and much more.
An electricity blackout is one of the risk scenarios envisioned in the recent . Imagining a future where space-based solar power is being used to provide renewable energy to Earth, the report explores the possibility that space debris could knock out power, temporarily plunging the world into darkness.
This potential scenario, borne of the drive to find new energy sources to aid the transition to a lower carbon economy is inextricably linked to several other of the most-pressing threats highlighted by both risk experts and the public in the AXA Future Risks Report 2024, notably climate change and technology.
Technology evolving
As well as enormous opportunity, new and emerging technology brings with it risks – known and unknown – that we and our clients must try to understand, assess, mitigate and manage.
Cyber and AI and Big Data were ranked third and fourth in the Future Risks Report, and it is clear that these are risks that are evolving at an elevated rhythm.
Many of the biggest issues on risk managers’ radar are transversal. They are often global in nature, frequently interlinked and even potentially systemic.
And risks arising from the widespread and rapid uptake of AI in almost all walks of life are interlinked with some of the other mega-trends highlighted in the AXA Foresight Report. Data and AI risks are interconnected with other potentially systemic risks like social fragmentation and even climate change.
Just a few years ago, AI was being talked about in boardrooms and by tech experts, now it is in the public domain and on everyone’s radar. As societies we need to find ways to take advantage of the undoubted opportunities AI can offer, but in controlled, safe ways.
While governments grapple with the question of how to regulate AI use, as an insurer and an employer, we are constantly thinking about the ways in which we can benefit from AI while considering what it might mean for our colleagues. We need to examine what skills colleagues might require in future, for example, to develop further data and analytics skills as well as techniques to work alongside AI to monitor the output that AI is generating and to complement the value-added elements that only humans can bring.
Alongside the rapid advances in technology, cyber risks are evolving apace. Understanding and managing these risks is a top priority for larger clients who often have in-house expertise and as a result, cyber insurance penetration is high for this segment. For mid-sized clients, that may not have dedicated risk teams looking at cyber threats, we are working both to support them in understanding and managing their risks beyond insurance, with pre-and-post-event services that can build resilience to attacks and enable a swifter recovery from them.
More generally, there is a definite philosophical shift in the way that companies are thinking about non-physical assets like data. These non-physical assets are today as valuable, if not more valuable, to many clients than their traditional physical assets like property. So we are collectively looking at bringing the management of the risks associated with these types of assets to a similar level of maturity as we have achieved with physical assets.
Geopolitics and climate change
The rapidly changing geopolitical environment highlights many of the risks that preoccupy our clients on a day-to-day basis, like supply-chain threats.
Clients are looking at ways to build their resilience to these potential challenges and many are now placing a greater focus on adaptability than ever before.
Perhaps unsurprisingly, the changing climate remains the top-rated risk in the AXA Future Risks Report. Much of our expertise and knowledge has been going both into finding ways to help manage the immediate threats of a changing climate and to help clients in their energy transition journeys.
For example, not only can we use our risk engineering expertise to help them understand where facilities might be vulnerable to risk, we’re able to use geospatial technology to pinpoint areas affected by weather-related events like floods even before loss adjusters are able to access sites. In addition, we are working with clients across all sectors to facilitate solutions to enable them to transition their operations to a lower carbon model.
Foresight for the future
Both geopolitical and climate risks are contributing to the current state of polycrisis. And continuing to assess and understand the interconnectedness of risk will be vital for future preparedness.
Possible social tension created by perceptions that the effects of climate change are more keenly felt by certain communities than others, and/or a scarcity of resources and potential for migration prompted by changing weather, for example, could lead to social fragmentation and unrest.
As a global specialty insurer, we are well-placed to help our clients have visibility of the ways in which risks intersect and may be amplified. And applying a foresight approach will become ever more important in anticipating and preparing for future risks given the fast-changing nature of some of the biggest challenges our clients, and indeed societies more widely, face.
The transversal role of the risk manager is increasingly important as they work to help their organisations to build resilience and increase their ability to be agile and adapt to evolving, interconnected threats – and opportunities. And the insurance market will support them with both technical expertise and forward-looking analysis to help them ready their organisations for the changing risks to come.
The next AXA Future Risks Report will be published in the autumn.
- Share This Article:
-
-
Global Asset Protection Services, LLC, and its affiliates (鈥溇派悠礡isk Consulting鈥) provides risk assessment reports and other loss prevention services, as requested. In this respect, our property loss prevention publications, services, and surveys do not address life safety or third party liability issues. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. The provision of any service does not imply that every possible hazard has been identified at a facility or that no other hazards exist. 九色视频Risk Consulting does not assume, and shall have no liability for the control, correction, continuation or modification of any existing conditions or operations. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any document or other communication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, 九色视频Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with our services, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.
US- and Canada-Issued 尤物视频Policies
In the US, the 九色视频insurance companies are: Catlin 尤物视频Company, Inc., Greenwich 尤物视频Company, Indian Harbor 尤物视频Company, XL 尤物视频America, Inc., XL Specialty 尤物视频Company and T.H.E. 尤物视频Company. In Canada, coverages are underwritten by XL Specialty 尤物视频Company - Canadian Branch and AXA 尤物视频Company - Canadian branch. Coverages may also be underwritten by Lloyd’s Syndicate #2003. Coverages underwritten by Lloyd’s Syndicate #2003 are placed on behalf of the member of Syndicate #2003 by Catlin Canada Inc. Lloyd’s ratings are independent of AXA XL.
US domiciled insurance policies can be written by the following 九色视频surplus lines insurers: XL Catlin 尤物视频Company UK Limited, Syndicates managed by Catlin Underwriting Agencies Limited and Indian Harbor 尤物视频Company. Enquires from US residents should be directed to a local insurance agent or broker permitted to write business in the relevant state.