The frequency of global systemic risks this century is evidence that such events should no longer be classified as outliers, according to Lloyd’s sustainability director Rebekah Clements.
Speaking as part of a panel discussion on ‘Competing Dimensions of Emerging Enterprise Risks’ at the Cambridge Centre for Risk Studies 14th Risk Summit, Just Transitions: Transforming Business Towards a Sustainable Future, Clements referenced the attacks on the World Trade Center, the Global Financial Crisis, the Arab Spring, and the Russia-Ukraine war and its consequences, as examples of systemic risk events which have happened in recent years.
“Systemic threats are not rare events, given that we have experienced several over the past few years,” she said.
She conceded that, given the scale of such risks, inevitably there will be large parts of them that are simply uninsurable. As such, she pointed to the recent COVID-19 pandemic, whose worldwide economic cost has exceeded the total capital resources of the global insurance market.
Nonetheless, Clements added, although the scale of systemic threats may mean that insurers, in isolation, are unable to cover the risks, there still exist opportunities for further public-private partnerships, pointing to the establishment of Pool Re as example of what can be achieved.
Global food security is an example of another systemic risk challenge, especially with regard to ensuring the security of supply chains, she noted. Here she pointed to the example of Lloyd’s recent work with regard to shipments of grain from Ukraine as an example of what can be achieved.
The first risk under the new cover designed to protect grain shipments from Ukraine – first revealed by Emerging Risks – was placed in the Lloyd’s market last August.
Broker Marsh and underwriter Ascot Group worked on the new marine cargo and war facility, which provides cover for Ukrainian grain and other vital food supplies being shipped through safe corridors established by the recently signed Black Sea Treaty between Russia and Ukraine.