Managing risks in the world’s megacities is increasingly complex
The infrastructure and development needed to support and sustain this shift provides many opportunities. But, as we have seen with the COVID-19 pandemic, risks are also amplified in densely populated spaces.
Technology will be key to addressing these challenges. Converging innovations such as the Internet of Things, artificial intelligence, 5G, and distributed ledgers give us transformative powers. Together, they will enable leaders in corporate and urban development to better handle evolving risks, such as demographic shifts, supply chain disruption, or health emergencies.
Intelligent transformation of urban centres
Creating a high quality of life in the cities of the future will depend on intelligent digitalisation.
Digital technology can be leveraged to monitor and manage a broad range of activities and sectors, including transport networks, power supply and healthcare. This will enable us to better understand and manage risk – and adapt to create greater resilience.
Similarly, embedding physical infrastructure with Internet of Things sensors will enrich already growing city-related datasets, enabling city managers to make better decisions and spot issues before they become major problems.
The Swiss Re Institute’s Quantum Cities™ initiative is designed to help governments and companies realise this transformation. It is an R&D framework that allows risks and opportunities to be visualised and understood.
Using an ensemble of models & tools developed in the context of this framework, we can move beyond simply covering risk to instead- predicting and preventing it.
This means it's may become possible to insure a wider range of things and services. These could include cover for natural assets, new types of cyber risk and protection against non-damage business interruption, for example.
It also means insurance models can be built into the fabric of urban living. Through predictive maintenance and supporting targeted government and corporate preparedness, this creates resilience as a service.
Understanding risk at scale
As we become increasingly connected as societies and economies, effects of adverse events on one city or company can easily seep into others. Using Quantum Cities™, we can get to the heart of what interconnected risks look like at scale – and work out how to offset them in cost-effective ways.
A practical example of smart city tech comes from South Korea’s management of the current pandemic. A government app tracks the location of all new visitors to the country and people who violate quarantine have to wear location-tracking bracelets.
But imagine how that pandemic risk could evolve and multiply if, for example, a hurricane or an earthquake were to hit an urban area coming out of lockdown. If evacuation efforts were not managed subject to social distancing, testing, and contact tracing, a pandemic could easily be re-seeded and the disasters could magnify each other.
Understanding these risk layers and the cascade of effects is not possible without embedded digital platforms. At the Swiss Re Institute, we are working on the likelihood of a pandemic emerging every 30 years. Rapid advances in machine learning, artificial intelligence, and data capabilities mean that the scenarios that we are talking about – and the ways that we manage the associated risks – will be incredibly different in even 10 years’ time.
Insurers at the heart of future urban resilience
So how can the insurance industry help build greater resilience?
Insurance companies are in a unique position. They sit at the centre of data collection – and the development of analysis technology. They are also well-practised at balancing risk and resilience. This puts them in the perfect place to support and drive forward urban resilience initiatives.
At Swiss Re, Quantum Cities™ is one of two main projects we have focused on in this area. Through a partnership with Microsoft, we are also working on delivering global solutions for governments, insurers, companies and citizens.
These tools and technologies can also help us build cities that are resilient to climate change risk, as well as focus on green and sustainable development.
Data visualisation, for example, can help us better manage scarce resources, including after disasters. Elsewhere, data from our natural world can help us protect assets like coral reefs and mangroves. And we can model how walkable cities, with abundant green spaces and tree-lined streets, can help in our transition towards sustainable autonomous travel and improve health.
Machines and humans as neighbours
But how do humans and machine intelligence live together in megacities? And what is the role of insurance here?
One example comes from the data generated by wearable technologies. We are already integrating lifestyle data into underwriting – but what about the use of data in the larger life and health risk space? How can hospital data be pooled while preserving privacy, so we can better learn from it? How can we offer personalized health and safety solutions using digital biomarkers to maximise the potential of preventive care and remote patient monitoring? How can we use technology to enable digital consultations to reach underserved communities?
We are working with academic and technology partners to develop privacy-preserving analytics and secure methods of collaboration. This area of confidential computing will grow to be even more important as the potential of these analytics becomes better known.
Public-private partnerships driven and supported by insurance companies have been vital to creating an evolving roster of insurance products that pull on the latest technology. Natural disaster coverage is a prime example.
Quantum Cities™ is the next phase in this story. It builds on the role of insurers, helping us harness technological innovation to create new insurance products. It gives us the power to weave resilience into society and improve well-being.
Building sustainable, resilient, interconnected urban environments relies on embedding insurance and technology. Together, they will guide transformational projects at scale, supporting urban and national strategic visions that benefit us all.