The CRO Forum publishes its annual Emerging Risk Radar
Three risks have been added this year: Biodiversity, Mental Health, and Socio-economic equalities
The Radar is a summary of emerging risks and associated major trends that could affect the insurance sector over the next five years and beyond. Risks are classified low, medium or high according to their perceived materiality. Both the list of risks and the assessment of impact and timing are based on the expert opinion of the Emerging Risk Initiative (ERI) working group of the CRO Forum.
In addition to the effects of the pandemic, a recent focus was particularly on the increasing importance of ESG topics. This is a long-term trend that applies to many areas of the insurance industry. This circumstance was taken into account by including ESG Issues in the “Major Trends”.
Some new risks have been added to the radar:
- Biodiversity, which recognises the decline in biodiversity and ecosystem services due to habitat destruction and overuse of natural resources, pollution or climate change.
- Mental Health was added in the light of a shift in insurance claims from somatic to mental illness, which will most likely receive a further boost from the Covid-19 pandemic.
- Socio-economic Inequalities, have increased worldwide following the global financial crisis. More recently, the Covid-19 pandemic and the resulting economic recession have exacerbated the trend towards greater income inequality, both between and within societies.
In order to improve the clarity of the radar, efforts have been made to cluster risks and to combine them where appropriate. Therefore, the risks “GMOs” and “Synthetic Biology” have been included under the heading “Genetic Engineering”. The new title “Resource Management” includes the old risks “Resource Scarcity” and “New Frontiers for Resource Extraction”. 3D printing has become fully established in the industry in recent years and has transitioned into insurance as a standard risk. Therefore, it is no longer included in the risk radar this year.
About the CRO Forum
SCOR is an active member of the CRO Forum. The Forum focuses on developing and promoting industry best practices in risk management. Comprised of Chief Risk Officers from multinational (re)insurance companies, it aims to represent the members' views on key risk management topics, including emerging risks. It regularly publishes practice and position papers on timely risk management subjects.