From the opening-up of previously frozen waterways in the Arctic to hackers tampering with artificial intelligence, the emerging risk landscape is multi-faceted according to the 11th edition of the SONAR report from ICMIF Supporting Member Swiss Re. The report reveals that the threats on the horizon are developing as dynamically as the technological, geopolitical and social changes in the world today.
One key emerging risk identified in the SONAR report that spans across technological, economic, social and environmental issues is the “Arctic opening”. As the Arctic Ocean and adjacent land are warming up two to three times faster than the rest of the globe, the ice is melting, and new shortcut shipping routes are opening up. However, the area is a hotspot for potential geopolitical tension, provoking concerns over how economic activities and related risks will be controlled in the region.
Patrick Raaflaub, Swiss Re’s Group Chief Risk Officer, said: “The concurrent increases in economic interests, environmental change and geopolitical tensions make the Arctic a hotbed for emerging risks and potential risk accumulation. With SONAR, we aim to proactively engage our clients and industry stakeholders in discussion of emerging risks, as we find this is the best way to be prepared.”
A more futuristic but potentially significant risk examined by SONAR is solar radiation management (SRM) technology, which could be used to cool the earth. While this does not address the root cause of global warming, namely greenhouse gas emissions, it could help lower global temperatures.
However, the report says, techniques such as injecting highly reflective particles into the atmosphere to reflect sunlight back into space could open up a whole new set of environmental risks and the potential for international conflicts. If implemented and then suddenly terminated, the result of SRM could be fast temperature increases, bringing on related weather effects. It could lead to an increase or geographical shift of extreme weather events like droughts or hurricanes. The question would be how to compensate those experiencing negative effects.
Another emerging risk in the technology space could derive from complex machine learning systems and artificial intelligence (AI). These two high-impact areas are driving the next wave of technological advances. However, as AI use increases, so do the possible risks. Professional hackers can not only trick models into making mistakes or leaking information, they can also harm model performance by corrupting training data or stealing and extracting machine learning models.
The SONAR report emphasises how the rise of AI is increasing opportunities for fraud and intellectual property loss, such as phoney creditworthiness ratings or false insurance scores. In car insurance, AI-based claims management systems may even be tricked into seeing massive damage where there is none. If AI gets hacked, it could even result in physical harm by causing autonomous car crashes or medical misdiagnoses.
The 11th SONAR report is available to download here.
Swiss Re is hosting a special hybrid event, Swiss Re SONAR 2023 “New emerging risk insights“, on 27 June 2023, 17:00 CEST, featuring Swiss Re Group Chief Risk Officer Patrick Raaflaub to mark the release of the SONAR 2023 report on new emerging risk insights. You can register here.
