SCOR’S EMERGING RISK RADAR Understanding emerging risks and trends SCOR’s Emerging Risk Radar shows the relationships among Trends (below), which are long term, high-level patterns, and Emerging Risks, which are specific consequences of these trends. The radar highlights the interconnections among identified trends (indicated by the colored dots associated with each risk on the radar) and the risks, as well as the expected time horizon over which these risks are likely to materialize (with higher likelihood risks positioned nearer the center of the radar) and the potential severity of the scenario impacts on SCOR (indicated by the size of the circle for each risk). The Emerging Risk Radar was developed to help SCOR monitor our own exposures. Therefore, while other emerging risk resources might track the risks most likely to impact the general public, the risks that appear on SCOR’s Emerging Risk Radar are focused on those that could have a negative impact on SCOR’s business, reputation, or operations. Nonetheless, the radar can be useful to others who want to understand how the risk landscape is evolving and which risks are top of mind in the reinsurance industry. GLOBAL CLIMATE CHANGE Climate change impacts the global economy, geopolitical stability, resource availability, the health of ecosystems, and human health. Climate risks include physical risks such as more frequent and severe natural catastrophes, transition risks as society moves toward a future low carbon economy, and legal risks that could result from a failure to adequately address the climate crisis. At the same time, new business opportunities are arising from the transition, such as the adoption of renewable energies. CHANGING DEMOGRAPHICS Developed countries with low birth rates, aging populations, and increasing longevity need to consider how to mitigate the decline in working-age populations and address the additional strain on pension and healthcare systems. In many developing and middleincome countries, the middle classes are expected to grow rapidly and increasing rural-to-urban migration could place additional strain on infrastructure. Climate change, environmental deterioration, and social and geopolitical trends will likely contribute to further migration of people both within and between countries. SHIFTING SOCIAL AND GEOPOLITICAL LANDSCAPES Increasing wealth inequalities, the weakening of international governance and cooperation, and the impacts of climate change and environmental degradation all generate social and geopolitical instabilities. Geopolitical tensions are increasingly playing out in the technology, information, and digital spaces, threatening personal, corporate, and governmental data and infrastructure security. HYPERCONNECTIVITY Hyperconnectivity is linked to the increased dependency of individuals, infrastructure, and organizations on information technology. Hyperconnectivity has become interwoven in life and economies, from work, social interactions, and healthcare services to the control of critical infrastructure systems. The result is a heightened vulnerability of societies to infrastructure disruption and cyber attacks, in addition to having impacts on mental health. DETERIORATION OF THE ENVIRONMENT Environmental deterioration, caused by a combination of factors, including human population expansion and urbanization, pollution, unsustainable resource use, and climate change, poses a major threat to the health of life on Earth. Essential ecosystem services that maintain the global availability of freshwater sources, clean air, fertile soils, and nutritious and varied food sources, among others, are at risk. NEW BUSINESS AND FINANCE MODELS The evolving needs of consumers are being met with new business models such as subscription-based offers for software or digital content, aggregator sites to compare prices and services, and digital marketplaces. Trends such as the sharing economy, the gig economy, and on-demand services lead to new risks and opportunities. Neo-banks and investment companies, as well as digital currencies and distributed ledgers are challenging established finance models. EVOLVING HEALTH TRENDS New scientific and technological breakthroughs in disease prevention, diagnosis, and treatment – although costly – are likely to lead to improvements in human longevity. However, other factors, such as climate change, biodiversity loss and pollution, sedentary lifestyles, poor diet, and substance abuse pose risks to human health. EMERGING TECHNOLOGIES Innovative technologies have the potential to disrupt the service sector as well as industrial development, production, and entire business value chains. Breakthroughs in automation, artificial intelligence, virtual and augmented reality, and “Big Data” lead to complex ethical issues such as discrimination and to challenges regarding workforce skills. 42 ACTIVITY REPORT 2024
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