Swiss Re's new SONAR report explores top emerging risks for the re/insurance industry and society
25 May 2016, Zurich
- Swiss Re's SONAR report highlights 21 emerging risks that the re/insurance industry should keep on its radar
- The three emerging risks with the highest potential impact are "emerging markets crisis 2.0", "the great monetary experiment" and "Internet fragmentation"
- Others topics of concern include "human-induced earthquakes" and "mass migration"
Turmoil in emerging markets, increased localisation of internet networks within country borders and financial repression are some of the key risks identified in this year's SONAR report published today. The publication is based on the SONAR process, an innovative crowdsourcing tool drawing on Swiss Re's unique internal risk management expertise to pick up early signals of what lies beyond the horizon.
The report offers insights into emerging risks, those newly developing or evolving risks whose potential impact and scope are not yet sufficiently taken into account. Among these, the report also highlights a "crisis of trust" in institutions, the "legal and pricing risks of the sharing economy" and technology-related topics, such as the rise of "precision medicine" and "distributed energy generation".
"Risk management is not just about managing risks in the present. It is about anticipating future ones to make sure we will be in a position to deal with them," says Patrick Raaflaub, Swiss Re's Group Chief Risk Officer. "These risks may only fully reveal themselves to future generations. That doesn't mean that we shouldn't act today to reduce uncertainty and alleviate their burden."
The identified risks are relevant to life and non-life insurance areas and are presented with the goal of helping industry players prepare for new scenarios by adapting their behaviours, market conduct and product portfolios.
Detecting early signals of looming threats allows for a proactive approach to risk mitigation and is an important step to help society as a whole to become more resilient.
Table: Overview of the 21 new emerging risks and their potential impact over time
The three top risks with the highest potential impact:
Emerging markets crisis 2.0: Turmoil in emerging countries could hinder the market entry and the penetration strategies of global insurance companies and even result in higher underwriting losses, especially in property, personal and commercial lines, for example in the case of riots.
The great monetary experiment: The long-term costs of negative interest rates and unconventional monetary policies are still unknown, yet they might lead to a broader loss of confidence in the monetary system. Short-term benefits are limited as the policies are unlikely to boost economic growth.
Internet fragmentation: Firewalls, special software to filter out unwanted information and isolated IT infrastructure detached from global networks: disconnected nets could soon become a reality. Their potential impact includes increased costs and disrupted business models for insurance companies and other businesses operating across borders.
Notes to editors
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The Swiss Re Group is a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer. Dealing direct and working through brokers, its global client base consists of insurance companies, mid-to-large-sized corporations and public sector clients. From standard products to tailor-made coverage across all lines of business, Swiss Re deploys its capital strength, expertise and innovation power to enable the risk-taking upon which enterprise and progress in society depend. Founded in Zurich, Switzerland, in 1863, Swiss Re serves clients through a network of about 70 offices globally and is rated "AA-" by Standard & Poor's, "Aa3" by Moody's and "A+" by A.M. Best. Registered shares in the Swiss Re Group holding company, Swiss Re Ltd, are listed in accordance with the International Reporting Standard on the SIX Swiss Exchange and trade under the symbol SREN. For more information about Swiss Re Group, please visit: www.swissre.com or follow us on Twitter @SwissRe.
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