Pandemic changes climate on future threats

AXA has published the seventh edition of its Future Risks Report, and the results are troubling.

The insurer interviewed 20,000 people both in the risk industry and members of the general public to ascertain the risks that were keeping them up at night.

It comes as no shock to see pandemics and infectious risks leap from eighth to first in the space of 12 months, but it was accompanied with a worrying dip in those who saw climate change as a major issue both now and in the future. Yes, climate risk was second in 2020, and it has been knocked off the top spot it had occupied for several years. Troubling is the data behind that fall.  Those in Europe put climate as their top risk but it fell to third in North America and Asia. Indeed, the percentage of those in North America who consider the global climate a major risk fell from 71% to 49%.

Axa CEO Thomas Buberl (pic) said the report delivered a number of lessons one of which was the concerning change in the perception of climate risk.

“While it remains the highest priority for our European respondents, we note that climate change has dropped to second place overall,” he said. “Given the context, this may not seem unusual, but the drop in absolute terms is concerning, especially among our American and Asian respondents, as we believe that shorter-term issues around the pandemic should not completely overshadow longer-term threats. I am convinced that we must remain fully committed to doing our part to tackle climate change, and Axa certainly is.”

The threat of cyber risk was put as third of the ten top future risks and the threat is seen as growing by many respondents given the increasing reliance on technology in the home and workplace.

In particular, the perception of cyber warfare risk has increased; it is seen as the main security threat by 47% of experts compared to 37% last year. The risk of shutdown of essential services and critical infrastructure following a cyberattack has also increased rising by 7% to 51%.

Geopolitical risks occupied fourth place, with a significant increase in the risk of digital warfare between nations, which experts consider to be the top new security threat. The fear of increased social unrest was fifth.

The top ten was completed by new threats to security, macroeconomic risks, natural resources and biodiversity risks, financial risks, and pollution.

“This edition reinforced our observation from previous years: risks are increasingly connected and interdependent,” added Mr Buberl. “The current pandemic exemplifies how they are global, complex, and, therefore, difficult to address. Insurers cannot tackle them alone. This is why Axa was the first insurer to suggest the creation of a pandemic insurance scheme to share the burden between governments and private actors.”

The study also found that respondents fear things can only get worse.

Of those surveyed 73% of the general public and 83% of risk experts said they fear populations around the world are more vulnerable today than they were five years ago.

The pandemic is a present danger and its impact is significant on every aspect of life. There has been growing concerns that the efforts to combat the disease will push investment and steps to tackle climate change to the back of people’s minds and Axa’s research tends to support those fears.