The move to a strategy where greater resilience is prioritised alongside the development of new solutions for the growing and emerging risks which are faced by the world has been described as a “win-win” by a senior insurance figure.
Noel Richardson CRO of AXA XL (pic) was speaking to Emerging Risks following AXA’s publication of its Future Risk Report this week.
The report gathers information and the views of 3,500 experts in 50 countries and a representative sample of 20,000 members of the general population in 15 countries, to measure and rank their perception of evolving and rising risks.
This year, the overriding conclusion was that the world is in the grip of a polycrisis. While the biggest concern was the impact of climate change, the report warned geopolitical tensions, the exponential emergence of new technologies (such as generative AI), and the acceleration of global warming, are no longer in isolation, but are all threatening the world simultaneously.
However, as the world face several current and future challenges there is now a growing need for businesses to look to their resilience alongside the support that can be offered by the insurance industry.
Richardson explained: “This is very much our philosophy. We are aiming to find ways to build up our clients’ resilience; it’s a win-win situation if we can. The interests of the client and the insurer are very much aligned here – we both want to mitigate risk, build up resilience and, therefore, reduce losses.
“Building centres of competence is really important here since many of the risks that we are talking about – like climate, cyber and geopolitical threats – go beyond what the private sector can deal with alone. So, we are engaged with public institutions, regulators and other stakeholders to really drive the discussions on these risks – and bring our expertise to bear.”
He added: “In this interconnected world, we have to recognise that resilience to risks is vital for the ability not just of individual companies to survive and thrive, but also of society more broadly to be able to withstand the threat of systemic risks that change rapidly.
“AXA’s manifesto encourages the statement ‘the future shouldn’t be a risk.’ If we can learn from each other, deepen and share expertise, focus not just on risk transfer but on risk management and mitigation, then we can make our businesses, and society as a whole more resilient to whatever the future may bring.”
The growth of and the reliance on technology has seen the insurer recently establish its Cyber Centre of Expertise (CoE) across the AXA group. Led by AXA XL, the Centre will serve as a platform to develop cyber risk services and risk transfer while sharing knowledge and lessons we’ve learned across all AXA entities.
The report also found a feeling of vulnerability remains at a high level. 84% of experts said they feel more vulnerable than they did five years ago at national levels (compared with 76% in 2020), and 73% at local levels (compared with 64% in 2020). This trend is also apparent in the general population, where feelings of vulnerability have increased by 7% in three years at both national and local levels.
However, the trust in various players to limit the consequences of new global crises is on the rise. In first place, scientists are trusted by 84% of experts and 70% of the general population. The level of confidence in companies is growing among both experts (72%, up 8% in one year) and the general population (49%, up 4%).
At the same time, 93% of experts and 74% of the general population believe that the role of insurers in limiting the impact of future risks is important or very important (compared with 89% and 69% last year).
The report got support from climate campaigners who praised AXA for once again highlighting the threats the world faces and called for caution from the industry.
Ariel Le Bourdonnec, insurance campaigner at Reclaim Finance, said: “Once again, the AXA report sounds the alarm. AXA is more aware than ever of the risks linked to climate change, but like the rest of the sector, does not seem to draw the logical conclusions. Despite paying out more than 100 billion dollars a year for the last three years due to natural catastrophes, insurers and reinsurers have persisted in supporting the development of new climate bombs. It is time to put an end to this hypocrisy and finally stop supporting new oil and gas projects directly responsible for this climate change.”