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Emerging and Future Threats
Nina Arquint, Head Group Qualitative Risk ManagementAMIS Convention, 15 May 2019, Mexico City
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What do we miss, when we do not have the full picture?
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Some drops will turn into water nurturing new risks while others just evaporate as they won’thit the ground
Catching emerging risk is a bit like catching fog.
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Emerging risk management is an integral part of enterprise risk management
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Sense & Identify Assess & Validate Implement Monitor & Control
Swiss Re has a comprehensive emerging risk identification process called SONAR
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Examples Teaser
We identify and assess emerging risks – some examples
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Algorithms are only human tooOpaque, biased, misled
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The perfect stormCloud risk accumulation
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The big dryingGrowing water stress
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Eyes wide shutThe world is sleeping less
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We are smarter together – Risk dialogue is key to tackle and prepare for the challenges and risks of tomorrow
Regulators
Clients
Investors
Rating agencies
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#SonarReport2019
SONAR Report
Swiss Re SONAR highlights newly developing or evolving risks for the insurance industry
www.swissre.com/sonar
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#SonarReport2019
Conclusion
Identifying and assessing emerging risks is key to be prepared for the future
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Legal notice
©2019 Swiss Re. All rights reserved. You are not permitted to create any modifications or derivative works of this presentation or to use it for commercial or other public purposes without the prior written permission of Swiss Re.
The information and opinions contained in the presentation are provided as at the date of the presentation and are subject to change without notice. Although the information used was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage or loss resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies be liable for any financial or consequential loss relating to this presentation.
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• Similarly, regulation should be technology neutral in order that new emerging tech risks will be covered. • In many jurisdictions, there are requirements for insurers to consider emerging risks. Examples: • Role of emerging risks in risk management systems
– The requirement, that emerging risks need to be taken into account in risk management systems is stipulated in international standards (ICP 8) as well as in many jurisdictional regulation (e.g. SII article 44)
• Duty of risk management function– The tasks of identifying and assessing emerging risks for the risk management function is e.g. explicitly included in SII (SII delegated act article 269)
• Consideration in ORSA process– The requirement in ORSAs that potential future material changes in it risk profile should be analysed (e.g. SII ORSA guidelines)
• Consideration in governance– Requirement that the risk management policy needs to cover emerging risks; (e.g. SII article 41, SII governance guidelines)
• Consideration in reporting– Requirement that the risk management function needs to report potentially material risks including emerging risks to executive management, BoD as well
as to the supervisor.• Of course, it is important for standard setters to continue to scan the horizon for emerging risks, and to consider whether existing principles are sufficient, or
if new regulation is needed. Standard setters are addressing emerging risks:• FSB commits to scan the horizon to identify and assess emerging risks, for addressing new and emerging vulnerabilities in the financial system [source 2019
work programme]• IAIS standards are addressing emerging risks in risk management (ICP 8) as well as in conduct for data protection arising from emerging risks (ICP 19)• There are examples of risks that have emerged, for which regulators are considering new regulation (e.g. tech, sustainability – see the two existing slides). To
reiterate my point, even here, for such undisputable risks, significant new regulation is not needed (see slides for further details).• Another potential statement:• For new emerging risks, the regulator should ask the following questions in respect to conduct and prudential:• Does a new risk has the potential to treat customers unfairly?• Does a new risk has the potential to get the insurer into trouble and, therefore, endangering the policyholder
Regulation
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We provide solutions for emerging catastrophe risks
DroughtPandemicNat Cat
