Swiss Re has urged brokers to educate themselves on this year’s emerging risks after releasing its 2020 SONAR Report, which highlights the risk landscape in the context of the coronavirus pandemic.
According to Martin Weymann (pictured), head of sustainability and emerging risks at Swiss Re, brokers need to familiarise themselves with the complete risk landscape and how it influences different macro-trends in order to adequately serve their clients’ best interests.
“I think brokers need to make themselves aware of and think through the key risks going forward, not only from a property and casualty and life and health standpoint but also from a financial markets and operational perspective,” Weymann said.
“Similar to our SONAR process, it will be important for brokers to raise risk awareness and flag the downside as well as the upside potential of certain risks.”
Weyman believes that in order for brokers and insurers to help build societal resilience, it’s important for them to identify the context of these new risks with clients.
“Emerging risks impact the insurance sector across the risk categories from P&C to L&H, financial and credit markets as well as from an operational perspective,” he said.
“In addition, it is important to highlight whether the risk is primarily an additional risk or a new opportunity, or a combination thereof. It is important to understand in which way an emerging risk will affect the insurance industry and wider society in order to decide whether and how the insurance industry can best contribute to help build societal resilience.”
The SONAR Report is part of the company’s forward-looking risk identification process to highlight emerging risks which are likely to have a significant impact on the industry.
Weymann says the report is conducted for three pivotal reasons: to raise risk awareness, to make the insurance industry and its stakeholders aware of the risk mitigation measures needed to protect their balance sheet and to detect and discover new risk pools and innovations in the insurance industry where development or product adjustments may need to take place.
“It also gives us the opportunity to highlight trends which are not yet fully developed, for example, those slow-moving trends that we need to keep monitoring over a longer time horizon such as climate change, or, more broadly, economic, societal, political, environmental and technological changes,” he added.
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The risk of a future pandemic, according to Weymann, should also be of significant interest to brokers because of the repercussions it has on insurable industries, including hospitality and travel.
“We raised the potential of a pandemic in the 2013, 2014 and 2015 SONAR report and particularly looked at the risks of infectious diseases becoming widespread as a result of increased travel and trade of food as well as their impact on financial markets,” he continued.
“Two challenges, as a consequence of COVID-19, that feature in this year’s report are the fragility of healthcare ecosystems and the stress on global supply chains, including pharmaceutical supplies.”
While Australia’s strong risk management and early intervention when the pandemic first struck resulted in the flattening of the curve, there will still be months of economic and financial struggles for organisations.
“I recommend, therefore, to consider the whole range of the risk landscape when preparing organisations for the future,” he concluded.