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 Swiss Re’s SONAR report published today.
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.
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.
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.
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.
Source: Asia Insurance Post
Date: 25th May, 2016.