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What is the top risk facing the world now?
The consensus in the Marsh Café at RIMS’ 2018 Annual Conference and Exhibition in San Antonio was resounding: 75% of audience members chose cyber, followed by 20% who feared extreme weather events most.
The poll, taken via an app for risk managers participating in Marsh’s event – The Changing Risk Landscape – mirrored results from the World Economic Forum’s Global Risk Report released in conjunction with Marsh earlier this year.
“Environmental was huge this year,” said John Drzik, president, global risk and digital at Marsh, who chaired the panel of experts. “With the hurricane season followed by wildfires, it was one of the biggest years for property damage on record – with over US$300bn in losses. The other thing that came through strongly [in the report] was the risk of the failure of climate change mitigation. If we don’t adapt fast enough, that could produce risk.”
Yet it was cyber that stole the show. “If Armageddon comes, it’s going to be coming in cyber,” said Patrick Brockett, PhD professor, Gus Wortham memorial chair in risk management and insurance at the University of Texas-Austin. “It used to be that cyber threats were more financial, but now there are plenty of examples of physical threats. I think that the consensus of cyber [as a top risk] is a good consensus, and it is much broader than we used to think in terms of what it is.”
“Cyber attacks – it’s the air we breathe,” said Greg Trevorton, Professor of the Practice of International Relations at the University of Southern California. He said the audience was right to deemphasise the threat of things like terrorism, which is politically hypersensitive, in favour of putting cyber higher on risk managers’ agendas.
“Cyber is the fastest growing insurance practice we have,” said Drzik. “The coverages are broadening. It used to be mostly in data breach insurance, now it’s more broadened to first- party risk.”
The market for cyber products is largely still developing – and there’s plenty of room to grow. “On the climate side, this year was a record year, but the estimated losses from cyber crime in 2017 was greater than $1 trillion,” said Drzik. “With cyber, the scale of our response infrastructure is that much lower.”
