Local insurance executives delve into WEF report

Local insurance executives delve into WEF report | Insurance Business

Local insurance executives delve into WEF report

The World Economic Forum Global Risks Report was launched earlier this week, offering clear insight into the most pressing challenges anticipated for 2019.

Key themes featured in the report include the human impact of global exposures, technological vulnerabilities, and environmental risks, as well as geopolitical and geo-economic tensions. While at first glance the risks identified can seem far removed from the everyday lives of SME owners, two local CEOs have weighed in on why brokers and their clients should both be taking note.

“Understanding risk at a global level is important for businesses of all sizes in Australia,” says Scott Leney, CEO of Marsh’s Pacific operations. “Trends and predictions on risk issues help us anticipate events that could impact our organisations and prepare ourselves to mitigate or find risk financing solutions for them.”

Considering the wider risks identified in the report, Leney pointed to three key takeaways for the Australian market.

“Businesses should be proactive in identifying potential sources of business disruption in their organisation and initiate or continue senior level conversations on how to best mitigate those risks,” he says.

However, mitigating risk is not the sole focus – Leney says firms should be increasingly investing in their response and recovery capabilities too.

“Risk response is as important as risk prevention and firms should focus on how to respond to fast moving events with a high degree of uncertainty,” he says.

Finally, Leney urged businesses to keep track of global political instability as international relations are currently in a period of change with years of globalisation giving way to nationalism.

“Consider geographic shifts in risk and how this might change strategies relating to investment decisions or supply chains,” he said.

Sean Walker, chief underwriting officer of general insurance at Zurich Australia, also weighed in on the report, drawing particular attention to environmental risks.

“For the third year running environmental risks have dominated the report, which is no surprise in a year that’s been characterised by bushfires, heatwaves and flooding,” he said.

This week alone, heat records have been broken in Western Australia, New South Wales and South Australia, and Walker warned that, if these conditions persist, there will undoubtedly be an impact on local business.

“Australian businesses should be building climate change resilience and adaptation strategies into their broader business plans,” he advised. “These plans need to be real and tangible, not treated as some ‘horizon 3’ or ‘Black Swan’ conceptual event but as something to be addressed as part of a new operating environment.”