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Aug 2022

Thawing permafrost and construction high on emerging risk radar

Source: Middle East Insurance Review | Jul 2022

Thawing permafrost and quantum computing lead the emerging risks facing companies and their insurers, according to Swiss Re’s latest SONAR report. The global reinsurer said that climate change is creating ‘a new generation of emerging risks’.
The latest SONAR report identifies a total of nine emerging risks. Of these, it identifies the potential for thawing permafrost to cause infrastructure damage and release pathogens frozen for decades as carrying the highest impact risk over the next three years. This is the 10th anniversary edition of SONAR reports.
A materials shortage in construction joins thawing permafrost as a high impact risk over the next three years. The report flags concerns over the impact of a shortage in raw materials on the quality and durability of buildings, as well as creating new liability risks for engineers and planners.
Quantum computing poses the highest threat beyond the next three years, the report said. It said the technology will challenge existing IT protocols and could potentially hack standard encryption keys before the full extent of opportunities can be realised.
Swiss Re said, “New risks are arising while the global community deals with known challenges such as the pandemic, war in Ukraine, economic turbulence and failing trust in established social institutions.”
It added that there was a time when today’s big challenges, such as climate change and pandemics, were themselves emerging risks.
Underwriting crypto asset risk carries a medium impact over the next three years, Swiss Re said in the report. This will present insurers with new challenges, including whether crypto assets are implicitly covered by existing property and cyber policies.
Swiss Re also identifies and tracks 23 macro trends that help define emerging risks for the insurance sector and, ultimately, their customers.
Swiss Re also classes new concerns over public health and medicines, driven by eroding trust and a rise in conspiracy theories, as medium impact over the next three years. Insurance coverage for satellites in a commercial space age and artificial intelligence in the legal sphere represent a medium impact risk beyond a three-year horizon. M 

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