Martin Weymann, head of Sustainability, Emerging & Political Risk Management at Swiss Re, believes the year ahead will not be defined by a single issue.
As the pandemic has highlighted vulnerabilities and interdependencies of societies around the globe, it has become even more important for people and re/insurers in particular, to understand the risks we now face. At Swiss Re we see three key themes emerging: the continuing effects of the pandemic; the unabated desire to make the world more sustainable, and the human-machine interactions that are an increasing feature of daily life. COVID-19 has reshaped economies and the health, wellbeing and priorities of society. The pandemic exacerbated existing inequalities, with many feeling the impact of rising unemployment and falling incomes.
Facing up to the long-term health burden
There are still unanswered questions about the long-term effects of the pandemic on health. Many medical procedures were delayed or cancelled, increasing the risk of high mortality as a result of undiagnosed cancers and other serious illnesses.
Mental health issues are an area of growing concern. Like physical health, support services have been hard hit. And we have yet to see the full impact of widespread lockdowns and increased isolation on people’s mental wellbeing.
Yet there is reason for hope. The unprecedented pace of innovation and collaboration that powered the development of vaccines and the rapid scaling up of medical equipment production, could provide a blueprint for our world to move faster in tackling future societal and environmental issues.
A greater focus on sustainability
A greener and more sustainable restart is high up the agenda for many companies and countries as they look to a post-pandemic recovery. The transition to a net-zero economy is gaining unprecedented momentum. And the recommendations of the Task Force on Climate-related Financial Disclosures are already being adopted and will create transparency on climate-related financial impacts and opportunities for both insurers and their clients.
While there is new traction for biodiversity in the insurance industry, it has always been a challenge to give ecosystem services an actual price. Now central banks and regulators are looking at these ecosystem services and the economic value they provide.
Embracing a technology-led world
Increasingly, digital devices are recommending behaviours and nudging individuals to change the way they live. There are few hard and fast rules that can be drawn up governing the wide gamut of applications for new and emerging tech. For example, brain computer interface devices could be very helpful in detecting the early signs of seizure and warning an individual to take medication. But are all the ethical implications of this technology and the associated risks fully understood? The question for any of the players in the digital economy is what is acceptable fair behaviour regarding the consumer interactions? When bots are causing the consumer to do something, there is a very thin line between forcing somebody and helping somebody. These topics need to be openly discussed.
Change is constant and the risk landscape is always evolving. While the pandemic has caused some rapid shifts, it has also demonstrated the fragility and interdependence of society and the risks we face. Ultimately, individuals, insurers and companies should not be paralysed by facing up to these new risks. Instead, they should look for opportunities to manage risk better for the benefit of everyone in society.