1. The Swiss Re introduced a Systematic Observation of Notions Associated with Risk (SONAR) to help society and the insurance industry adapt to emerging risks.
2. It functions by analysing the shifting risk landscape and examine how certain risks could impact the insurance industry in the future. Aimed at external stakeholders, the study looks at risks such as prolonged power blackouts, cyber attacks, emerging infectious diseases and the unresolved sovereign debt crisis.
KEY CRITERIA
1. In-house risk intelligence - SONAR gathers early signals of emerging risks from employees. These notions are then scanned and prioritised.
2. Multiple sources - Other sources include think tanks, universities and institutions such as the World Economic Forum, fellow risk managers across the insurance industry through the CRO Forum, which promotes best practice in emerging risk management.
3. Foresight - The earlier the insurance industry starts adapting to emerging risks, the better prepared it will be for tomorrow's challenges. Foresight and knowledge sharing across stakeholders are essential to navigate in to a future in which change might be the only constant that remains.
SWISS RE SONAR REPORT
1. Topics are grouped by insurance business area, with a topic being allocated to the area that would potentially be most impacted. Of the 27 emerging risk topics covered, six were allocated to Property, eight to Casualty, four to Life&Health, three to Financial Markets, two to Claims and four to Operations.
2. All topics feature an assessment of their potential overall impact on the insurance industry and the time frame within which they are likely to occur.
3. The majority of topics were rated by Swiss Re as being of medium impact for the insurance industry. With regard to time frame, most topics were assessed as being rather imminent – with the exception of four Casualty-related topics which are expected to manifest only in the more distant future.
DEFINITIONS
1. Emerging risks is defined as newly developing or changing risks that are difficult to quantify and could have a major impact on society and insurance industry.
2. The overall impact is an indicator of the potential financial, reputational and/or regulatory impact associated with an emerging risk topic. It is assessed using a high/ medium/low scale:
- High - Potentially high financial, reputational and/or regulatory impact or significant stakeholder concern.
- Medium - Potentially medium financial, reputational and/or regulatory impact or moderate stakeholder concern.
- Low - Potentially low financial, reputational and/or regulatory impact or low stakeholder concern.
3. Time frame refers to the period of time in which the risks associated with an insight might manifest and have an impact. Three time frames to help readers assess the imminence of each topic: 1–3 years, 4–10 years, >10 years
(Source: SwissRe)
