The world is facing multiple interconnected crises which bring about ever-more complex risks, according to a study from the insurance firm Swiss Re which examines 16 emerging risks and their potential impacts on the insurance sector and society.
Three issues at the top of the list are the weakening resilience of supply chains, the cascading effects of natural disasters, and the repercussions of persistent underfunding of healthcare systems, according to the company’s 12th annual “SONAR emerging risk report.”
On supply chain vulnerability, the report finds that companies’ resilience against business interruption risk is weakening. That’s because management agendas have shifted back to basic cost reduction efforts, following a pandemic-era focus on supply chain security. Less investment in supply chains makes them less resilient to shocks, be those natural catastrophes, unforeseen technology outages or political events, and increases the risk of business interruption-related losses.
On natural disasters, Swiss Re said that floods, wildfires, severe convective storms and other natural peril events routinely inflict widespread property damage. But less well publicized are the cascading effects of such events on the systems that underpin society, including energy, water, and transport infrastructure.
And on health care investments, the report found that a robust healthcare system requires countries to spend around 7% to 7.5% of their gross domestic product (GDP). However, 132 countries spend less than that threshold, which may eventually lead to higher morbidity and mortality rates, potentially exacerbating future pandemics and also resulting in lower global GDP.
The other 13 risks highlighted in the report include:
- the trend of using micro-dosed psychedelic drugs or “enhancing” prescription drugs to boost productivity at work
- the growing health crisis of social isolation and loneliness
- the security of personal health data in women’s healthcare and drug studies
- climate change impacts that may lead to civil unrest, terrorism, or armed conflict
- people’s overdependency on “big tech”
- overcrowding of infrastructure such as marine aquaculture and offshore wind and oil & gas
- the vulnerability of financial markets to data shared on social media
- the increase in cyber-enabled fraud committed through organized crime
- the risks of extracting minerals from the seabed through deep-sea mining
- the challenges of recycling green infrastructure such as solar panels, wind turbines, and batteries
- the dangers of building up nuclear power plants such as Small Modular Reactors (SMRs)
- the lack of understanding of the intended and unintended effects of artificial intelligence (AI)
- the need for insurance providers to adjust their prices and risk exposures to foundational shifts like climate change and digitalization
