A new report from
Swiss Re reveals the top 21 economic, technological, environmental and socio-political trends currently threatening businesses across the globe.
Each year, the reinsurer’s SONAR Emerging Risks report forecasts macro trends expected to emerge within five to 10 years and underlines the need for a strong insurance program.
“The insurance business as the commercial risk transfer industry needs to constantly monitor an evolving risk landscape and adapt its behavior, market conduct and product portfolio,” Swiss Re wrote in its introduction to the report. “This poses significant and permanent challenges for our industry, which can no longer rely solely on historical data to assess tomorrow’s exposure.”
According to Swiss Re, the four emerging risks that could cause the largest impact are:
- Managing the “Internet of Things”: By 2025, a family of four could have more than 100 connected devices and individuals may be in daily contact with 3,000 to 5,000 connected things, creating huge amounts of data. Hacking and malfunctions could have a significant impact and traditional P&C policies, as well as on cyber products in P/C and life and health.
- “Super” natural catastrophes: Rising natural disasters, such as volcanic eruptions and atmospheric river events, have led to significant property damage and business interruption. Swiss Re feels such “super nat cats” could have significant repercussions throughout the economic system, interrupting global travel and supply chains.
- A growing appetite for de-globalization: Political conflicts in Eastern Europe and the Middle East and East Asia have spurred sanctions and interventionist policy tools that stop the flow of capital, goods and people across borders. This could create a negative impact on the economic and investment environment, leading to lower premium volumes and return on investment.
- Recent unconventional monetary measures by central banks: “Extremely accommodative” monetary policies have intensified, resulting in competitive devaluation. Debt burdens are unlikely to be reduced, which could cause continuous low interest rates and lower the growth of insurance companies, depressing reinsurance rates.
Other trends explored in the report include:
- The Brazilian drought
- Lifestyle drugs
- Predictive maintenance
- Rising pandemic risk
- Wildfires
- Sinking cities
- Genetic engineering
- Challenges of the energy transition
- The antibiotic boomerang
- Decaying infrastructure
- Hydrofracking fluids
- Fossil fuel mismanagement
- The dangers of LED light
- Office of the future
- Traffic jam in the skies
- Chemicals in the environment
- Scarcity of raw materials
The report is available in its entirety on Swiss Re’s website.
