Entries tagged with “Emerging Risks”.
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Thursday, January 15, 2015
Posted by Claire under Emerging Risks, Regulation
How to balance the risks and rewards of emerging technologies is a key underlying theme of the just-released World Economic Forum (WEF) 2015 Global Risks Report.
The rapid pace of innovation in emerging technologies, from synthetic biology to artificial intelligence has far-reaching societal, economic and ethical implications, the report says.
Developing regulatory environments that can adapt to safeguard their rapid development and allow their benefits to be reaped, while also preventing their misuse and any unforeseen negative consequences is a critical challenge for leaders.
John Drzik, president of Global Risk and Specialties at Marsh, says:
Innovation is critical to global prosperity, but also creates new risks. We must anticipate the issues that will arise from emerging technologies, and develop the safeguards and governance to prevent avoidable disasters.”
The growing complexity of new technologies, combined with a lack of scientific knowledge about their future evolution and often a lack of transparency, makes them harder for both individuals and regulatory bodies to understand.
But the current regulatory framework is insufficient, the WEF says. While regulations are comprehensive in some specific areas, they are weak or non-existent in others.
It gives the example of two kinds of self-flying aeroplane: the use of autopilot on commercial aeroplanes has long been tightly regulated, whereas no satisfactory national and international policies have yet been defined for the use of drones.
Even if the ramifications of technologies could be foreseen as they emerge, the trade-offs would still need to be considered. As the WEF says:
Would the large-scale use of fossil fuels for industrial development have proceeded had it been clear in advance that it would lift many out of poverty but introduce the legacy of climate change?”
Geopolitical and societal risks dominate the 2015 report. Interstate conflict with regional consequences is viewed as the number one global risk in terms of likelihood, with water crisis ranking highest in terms of impact.
The report also provides analysis related to global risks for which respondents feel their own region is least prepared, as highlighted in this infographic:
The report was developed with the support of Marsh & McLennan Companies and Zurich Insurance Group and with the collaboration of its academic advises: the Oxford Martin School (University of Oxford), the National University of Singapore, the Wharton Risk Management and Decision Processes Center (University of Pennsylvania), and the Advisory Board of the Global Risks 2015 report.
Tuesday, January 21, 2014
Posted by Claire under Climate Change, Emerging Risks, Environment
Climate change is among the five most likely and most potentially impactful global risks, according to the just-released World Economic Forum (WEF) 2014 Global Risks Report.
The report assesses 31 risks that are global in nature and have the potential to cause significant negative impact across entire countries and industries if they take place.
An analysis of the five risks considered most likely and most impactful since 2007 shows that environmental risks, such as climate change, extreme weather events and water scarcity, have become more prominent since 2011 (see chart above).
This suggests a pressing need for better public information about the potential consequences of environmental threats, the WEF says.
Concern about socio-economic risks such as income disparity, unemployment and fiscal crises has become more prominent over the years.
The report reveals that fiscal crises and structural unemployment and underemployment are among the most impactful risks while the latter also feature among those most likely to occur. This has knock-on effects on income disparities, which is regarded as the overall most likely risk, the WEF notes.
Cyber attacks and the breakdown of critical information infrastructure also feature among the most prominent risks in this yearâ€™s report.
The WEF notes:
This arguably reflects the increasing digitization of economies and societies, where rising dependence on information and data, as well as the systems to analyze and use them, has made attacks more likely and their effects more impactful.â€
WEF note: Global risks may not be strictly comparable across years, as definitions and the set of global risks have been revised with new issues having emerged on the 10-year horizon. For example, cyber attacks, income disparity and unemployment entered the set of global risks in 2012. Some global risks were reclassified: water supply crises and income disparity were reclassified as environmental and societal risks, respectively, in 2014.
The report is published in collaboration with Marsh & McLennan Companies, Swiss Re, Zurich Insurance Group, National University of Singapore, Oxford Martin School, University of Oxford, Wharton Risk Management and Decision Processes Center, University of Pennsylvania.
Tuesday, February 19, 2013
Posted by Claire under Emerging Risks, Homeowners Insurance
Now that weâ€™ve had the weekend to absorb Fridayâ€™s news of a meteor exploding over Russiaâ€™s central Ural mountains, injuring up to 1,200 and causing damage to buildings in six cities, hereâ€™s a quick recap of the insurance impact.
According to a report by catastrophe modeler AIR Worldwide, most of the damage was caused by the shock waves as the meteor broke up in the atmosphere. The force of the explosion was enough to shatter dishes, televisions, and windows.
The explosion is estimated to have shattered more than 1 million square feet of glass, AIR Worldwide notes. Preliminary reports suggest more than 3,000 homes and businesses sustained damage from broken glass, including a zinc factory where part of the roof collapsed.
What about the insurance impact?
AIR Worldwide reports that in many countries with developed insurance markets, a comprehensive multi-peril insurance policy generally will cover all risks that are not specifically excluded, meaning that meteorite damage would generally be covered:
The dwelling portion of the homeowner policy is very broad and if damage from falling objects is not listed in the exclusions, it is generally covered.â€
CNN citesÂ local officials who say damage from Fridayâ€™s explosion could be as much as $33 million.
The Insurance Information Institute (I.I.I.) also reminds us that while the likelihood of actually getting struck by a satellite, a meteor or an asteroid is extremely rare, the good news is that if one of these falling objects does hit you, your home or car or place of business, the resulting damage would be covered by insurance:
Falling objects, including satellites, asteroids, meteors and space debris, are covered under standard homeowners and business insurance policies.â€
Good to know, especially as the Russia meteor weighed around 10,000 tons, entered the earthâ€™s atmosphere at a hypersonic speed of at least 54,000 kph (33,000 mph) and shattered into pieces about 30 to 50 kilometers (18 to 32 miles) above the ground.
The Wall Street Journal says that it is the largest reported meteor since one that hit Tunguska, Siberia in 1908, according to the U.S. National Aeronautics and Space Administration.
Thursday, February 9, 2012
Posted by Claire under Business Risk, Emerging Risks
Two political risk reports are pointing to the continued instability in the Arab Spring countries as an ongoing concern for businesses in 2012.
Aonâ€™s 2012 Political Risk Map notes that while clarity has begun to emerge in some of the countries affected by the Arab Spring, the resulting tension has spurred or intensified protests in dozens of countries, both within the region and elsewhere.
In a press release, Aon says that interest in political risk insurance is rising, as chief stakeholders take notice:
These uprisings and protests remain a key concern in 2012 and we see this reflected in rating downgrades of several countries. This is forcing CEOs and CFOs of businesses with overseas operations in emerging markets to revisit risk management and risk mitigation measures.â€
In addition, the outcome of elections in the United States, France, RussiaÂ and China may contribute to greater global uncertainty, while the eurozone debt crisis also remains a significant risk and extends to those countries economically or otherwise dependent on the region, according to Aon.
In similar vein, a recent report from risk analysis firm Maplecroft highlights the risk of continuing instability in Arab Spring countries among the most significant political risks for businesses and investors in 2012 and beyond.
Of the 10 states with the fastest increasing risk trends in Maplecroftâ€™s short-term Political Risk Index, nine are located in the Arab world, reflecting the political upheaval and unrest taking place in the region. These countries are: Algeria, Bahrain, Egypt, Kuwait, Libya, Morocco, Oman, Syria and Tunisia.
Maplecroftâ€™s analysis indicates there is also increased risk of unrest in other Arab states, including Saudi Arabia and Sudan.
Check out PC360Â for more on this story.
Monday, January 31, 2011
Posted by Claire under Emerging Risks
Political unrest in the Middle East continues to dominate the news headlines amid recent protests in countries such as Egypt, Tunisia and Yemen.
Earlier today creditÂ ratings agency Moodyâ€™s Investors Service Inc. downgraded Egyptâ€™s government bond ratings and changed its outlook to negative from stable.
Moodyâ€™s said the decision was prompted by the increased political event risk and concern that the policy response could undermine Egyptâ€™s already weak public finances.
Meanwhile, a number of international businesses haveÂ started to suspendÂ operations in the country due to theÂ volatile situation.
Just last week Aon warned that the level of political risk is rising in more countries than it is declining this year, leading to a greater need for political risk insurance cover.
A total of 19 countries were downgraded in Aonâ€™s 2011 political risk map, while 11 countries were upgraded.
Political risk will continue to be a major influencer for businesses transacting in emerging markets in 2011, according to Aon.
The map measures the political risk of 211 countries and territories based on the level of risks such as currency inconvertibility and exchange transfer; strikes, riots and civil commotion; war; civil war; sovereign non-payment; political interference; supply chain disruption and legal and regulatory risk.
Wednesday, November 3, 2010
Posted by Claire under Business Risk, Emerging Risks
Immediate and pressing financial events have pushed risks that involve issues such as climate change or pandemics off most executivesâ€™ radar screens, according to a global survey conducted by Oliver Wyman with the Financial Times.
Less than 10 percent of executives surveyed consider potential threats related to environmental issues, societal risks, or technological concerns as major risks.
According to the study:
This result is especially troubling given the high-profile events related to these issues that have emerged in the last 12 months, including the eruption of volcanic ash in Iceland and the sudden emergence of the H1N1 flu.â€
So what do executives consider their biggest risk over the next 18 to 36 months?
The survey found that 71 percent of executives listed global recession among their top five concerns, while 56 percent cited regulatory risks as one of their top five concerns.
Nearly one-quarter of respondents viewed recession as the biggest risk to their company.
Liquidity/credit crunch, financial market volatility and commodity price volatility rounded out the top five perceived global emerging risks among survey respondents.
Some 650 executives and senior managers of global organizations with annual revenues greater than $1 billion responded to the survey.