Dealing with Risk - A Swiss and Indian Perspective

The world today is witnessing unprecedented influence of technology in every sphere of life. In rapidly growing economies, technology is helping leapfrog some of the traditional barriers to progress. However, they are posing many challenges and associated risks, which if ignored may effect business, environment and society.

In 2015, Swiss Re Bangalore entered into a partnership with swissnex India of the Consulate General of Switzerland in Bangalore and connects Switzerland and India in the fields of science, education, art and innovation. A joint lecture series was set up with a twofold motive. Firstly, to provide the "Swiss perspective" and offer high level inputs on risk-related topics to inspire peers, future leaders, and potential partners. Secondly, to create a platform for knowledge exchange and engagement between peers in the industry as well as the academic sphere including students and experts from top universities across India.

In all, there were five lectures since April 2015, covering topics that are of high relevance in India and the developing world. The speakers included Matthias Weber, Swiss Re Group Chief Underwriting Officer, Dr. Christoph Nabholz, Head Business Development, Swiss Re Centre for Global Dialogue, Dr. Anwar Hasan, Head Risk Management, Swiss Re Bangalore, Dr. Prof. Solange Ghernaouti, Director, Swiss Cybersecurity Advisory and Research Group and Prof. Hans Jürgen Herrmann, Theoretical Physicist and Professor at ETH Zürich.

How technology is changing the global risk landscape

Swiss Re's Matthias Weber kicked off the series. He touched upon three key areas: technology in health and healthcare, cyber risk, and big data and smart analytics. In health, India is witnessing massive demographic changes with its population set to touch 1.6 bn by 2050. People are living longer and healthier just like in Europe and Americas. Advancements in genome sequencing and healthcare are helping pre-identify individual and general population health risks thereby providing the ability to implement screening programs, provide individualised treatment and recommend lifestyle changes.

On cyber risks, Matthias said that the world could see annual economic losses anywhere between USD 400 bn to USD 1000 bn due to the increased complexity, interconnectivity and interdependency of technology. Cyber risks are increasingly stemming from recent technology trends such as cloud computing, shadow IT, BYOD, mobile and flexible working and use of open source software. He also stressed that not all of the risks are insurable as it cannot be easily quantified. Though current cyber risk insurance covers generate premiums of USD 2 bn to USD 2.6 bn, insurance is not the solution to mitigating cyber risk, he added.

Matthias also spoke about how the partnership between technology and insurance companies will become more prominent in the future. Cognitive computing and the use of telematics in vehicles were cited as a couple of examples. Cognitive computing will be used in insurance for underwriting and risk analytics and will benefit both the customer and the insurance company. On telematics, the data obtained through the onboard devices is improving risk selection and portfolio management. We are also witnessing many companies developing driverless vehicle technology which is set to revolutionise motor insurance with product liability covers taking more prominence in the coming years.

Health risk factors in rapidly changing economies

In the next lecture, Dr. Christoph Nabholz, Head Business Development, Swiss Re Centre for Global Dialogue and Dr. Subu Subramanian, Professor Population Health and Geography, Harvard T.H. Chan Public School of Health, spoke about key risk factors associated with the increasing prevalence of chronic, non-communicable diseases (NCDs) in rapidly growing economies like India. This was also a pre-launch event for Swiss Re Centre for Global Dialogue's Risk Dialogue Series on Health Risk Factors in India which was done in collaboration with the Harvard T.H. Chan Public School of Health.

Dr. Christoph Nabholz shared insights on the research collaboration SEARCH (Systemic Explanatory Analyses of Risk Factors Affecting Cardiovascular Health) in Brazil, China, India and Mexico where cardiovascular risk factors were analysed in some of the most populated regions of the world including India. Christoph eluded that only about 25% of India's population has access to healthcare services at European standards and 58% of health care spending are directly out of pocket.

Today non-communicable diseases (NCDs), including CVD, account for 53% of total deaths, which is expected to grow to 67% by 2030. High blood pressure and high glucose are two chief NCD risk factors for India. India with its vast population and rapidly developing economy, many millions still suffer the effects of undernourishment, poor sanitation, infectious diseases and lack of access to proper healthcare. But as the situation improves and communicable diseases decline, a rapid transition to NCDs emerges which India needs to deal with in parallel in order not to suffer a significant NCD death burden in the future.

"An inspiring session with lots of great memories! We had so many questions that after significantly overrunning we had to enforce a closing of the session. What an exciting way to share our corporate market knowledge with the Bangalore expert medical and public health community!"- Dr. Christoph Nabholz, Head Business Development, Swiss Re Centre for Global Dialogue

Following Dr. Nabholz's analysis, Prof. Subramanian shared insights on the distribution of CVD and risk factor burden in India. Prof. Subramanian showed the socioeconomic patterning in smoking, diabetes, hypertension, obesity, blood lipids, fruit/vegetable consumption, and lack of exercise - all of them well established as risk factors for CVD. Contrary to popular belief, Prof. Subramanian's research showed that with the exception of one risk factor (smoking), the CVD risk factors are far more prevalent among higher socioeconomic groups. Prevalence of smoking appeared to be higher among lower socioeconomic groups, but it varied by the type of smoking; bidi prevalence was higher among the poor, while cigarette smoking was higher among the better-off. He argued the need for such disaggregated analysis so that programs and policies can be targeted to the groups who are experiencing the largest burden.

Giving the example of how Government of India's efforts to improve the collection of national data on HIV helped in establishing a robust baseline for surveillance and monitoring (as opposed to relying on the rhetoric), Prof Subramanian stressed the urgent need for similar national data collection efforts required for communicable and non-communicable diseases in India. In conclusion, Prof. Subramanian pointed out the need for systematic surveillance and monitoring of both health risk factors and socioeconomic status.

Emerging risk in emerging economies

In August, at the prestigious Indian Institute Management Bangalore (IIM-B) campus, Dr. Anwar Hasan, Head Risk Management Swiss Re Bangalore (and an emerging risk expert), was invited to speak about the emerging risks in emerging market economies for societies and businesses and how early identification will enable more effective prevention and management measures.

Being the first of its kind event in IIM-B, many students had little knowledge about the reinsurance industry. Dr. Anwar articulated on how insurance can help societies be more resilient and gave a holistic view of Swiss Re's enterprise risk management and the risk assessment framework. He then focused on the key to living longer and happier lives where insurance has a huge role to play as South Asia currently ranks very low on the human development index with average life expectancy of around 67 years compared to over 80 in developed nations.

Dr. Anwar stressed that emerging economies in Asia should focus on health, education and infrastructure development. With right policies and planning, these economies could avoid falling into the trap of obesity and other non-communicable diseases, which have plagued developed countries, and support longer lives in a sustainable way. Dr. Anwar spoke on the increasing interconnectedness of risks and shared a high-level overview of Swiss Re's process of collecting early signals through its extensive internal SONAR network and its external engagement with various world bodies like the WEF to understand the threats and opportunities emerging risks present.

Cyber security and strategies to optimize robustness of networks

The concluding two lectures saw two distinguished Swiss speakers invited by swissnex India: Dr. Prof. Solange Ghernaouti, Director, Swiss Cybersecurity Advisory and Research Group and Prof. Hans Jürgen Herrmann, theoretical physicist and professor at ETH Zürich. Dr. Ghernouti's presentation at the International Institute of Information Technology-Bangalore (IIIT-B) was on ‘Building cyber competencies to master critical risks in a hyper connected world’.

Dr. Ghernaouti identified main drivers, vulnerabilities and risks related to the development of the digital economy, of cyber space and the Internet of Things (including smart cities) in order to understand what the major stakes and challenges to produce security and happiness are and how Switzerland can contribute to build the future by answering cyber security needs through science, education and innovation. India being a booming center for startups, many experts feel that cyber security is not a top priority as for most of them it does not seem so essential. Hence, the need for better education on cyber security and a culture of cyber risk assessment and mitigation needs to be developed and embedded into our daily lives to increase overall cyber security.

Prof. Hans Jürgen Herrmann in the concluding event presented various strategies of optimizing the robustness of networks. The internet, protein interactions or social organizations are examples for complex networks. Such networks typically cease to be operational when they fall apart in disconnected pieces. Destruction can happen randomly or due to a malicious attack. Prof. Hermann presented various strategies on optimizing the robustness of networks while preserving some of their properties as for instance their degree distribution. Artificial networks like the Apollonian network can serve to systematically investigate the optimization process. Applications to power networks, botnets, road systems and brain models were discussed.

The lecture series witnessed a highly engaged audience throughout the year numbering around 500 - an eclectic mix of people from diverse backgrounds like insurance, health, analytics, regulatory bodies and business organizations. It was an opportunity to gain deeper insights into the Swiss way of thinking, a country better known in India for chocolate, mountains and watches. In the words of Balz Strasser, CEO swissnex India, the lecture series gave eye-opening insights on how technological, socio-economic and infrastructure development, are changing the risks landscape in sectors such as health, cyber security, insurance, and many others.

"A great collaborative platform between Swiss Re and swissnex India that brought Swiss industry and academic perspectives on dealing with risk to the audience in India…a highly engaged audience with great interactions and lots of questions made these series memorable." – Alok Kumar, Managing Director, Swiss Re Bangalore

Swiss Re would like to express its gratitude to the team from Swissnex India for their support in helping organize these lectures- special mention to Balz Strasser, Navya Shivaprakash and Maitree Dasgupta.

Summary by Karthik Sampath and Shreya Rawlley.