Reinsurers today are operating in a risk landscape that is shifting ever more rapidly. Charting emerging risks and opportunities in a pre-emptive way is an important element of Swiss Re’s integrated approach to risk management.
How we define emerging risks
We define emerging risks as newly developing or changing risks which are difficult to quantify and which may have a major impact on an organisation. We investigate these risks because of the substantial potential impact on our business.
Key drivers of the changing risk landscape include new economic, technological, socio-political and environmental developments as well as the growing interdependencies between them which can lead to an increasing accumulation of risk. In addition, there is a changing business environment to consider: liability and regulatory regimes continue to evolve, stakeholder expectations are strengthening and risk perception shifting.
The key is to reduce uncertainty and thus help diminish the volatility of business results. While risks today are assessed largely reactively based on loss experience, a faster pace of change requires a more anticipatory approach. To achieve this, we strive to translate risks associated with high uncertainty into a quantifiable measure.
Our SONAR framework
SONAR (“systematic observation of notions associated with risk”) is our Group-wide framework specifically designed to manage and communicate emerging risks. Firmly embedded in the Group's risk management organisation, SONAR allows us to identify, assess and report these risks in a timely manner and to factor them into our decisions. The process involves two steps. Firstly, we have an interactive intranet platform which enables our employees to share and discuss risk notions on all main areas of the emerging risk landscape quickly and easily and to stay up-to-date on new developments. Secondly, our emerging risk specialists periodically cluster and further assess these risk notions for their potential impact on our business.
Swiss Re SONAR: new emerging risk insights for 2015
De-globalisation, super natural catastrophes, financial repression and the challenges posed by the "internet of things" are some of the risks discussed in Swiss Re's 2015 SONAR. They are also the risks...