The world is facing multiple interconnected crises which bring about ever-more complex risks, according to the findings in the 12th SONAR emerging risk report from ICMIF Supporting Member Swiss Re. The report explores critical topics of the future to foster better understanding of new or changing risks, their interactions and dependencies.
Patrick Raaflaub, Swiss Re Group Chief Risk Officer, said: “We live in a world characterised by interconnected crises, which in turn can give rise to new risks. For re/insurers, it is key to anticipate trends and understand how major global issues such as climate change, economic uncertainty or geopolitical turmoil could impact not only the industry but also society as a whole.”
A key topic included in the report is weather-related natural catastrophes and the increase in their frequency and severity. Swiss Re’s findings show that while floods, wildfires and storms can lead to property damage and loss of life, the cascading effects of such events pose additional risks. Wildfires can impact the water infrastructure by contaminating water sources or cutting access to it. Floods and storms can likewise damage energy grids and disrupt transport networks, bringing production lines to a standstill due to lack of power, leading to lost production time, materials spoilage and delays to deliveries. If critical infrastructure and supply chains are affected, Swiss Re says, the accumulation of damage can be significant.
The report also found that while the security of supply chains was a priority for companies following the large-scale disruptions caused by the COVID-19 pandemic, the focus has shifted back to immediate cost savings. The cost pressure has grown, but so too have the risks to supply chains – as exemplified by the Red Sea crisis. Due to the more volatile geopolitical landscape, increasing frequencies of extreme weather events, economic uncertainty, and heightened cyber and technology risks, key supply routes around the globe are likely to become less secure. Given the current situation and the negative outlook on these risk drivers, supply chain resilience should be at the top of companies’ agendas. If risks accumulate or coincide with an already stressed supply chain, the economic fallout could be significant.
Climate change and supply chain issues also affect the healthcare infrastructure, exacerbated by consistent underfunding of healthcare systems, was part of the report’s findings. Essential services such as water, sanitation and electricity supplies may be compromised under more extreme climate scenarios that cause a higher risk of frequent flooding and other disruptive events. Weakened health services increase risks for societies, with delayed or inadequate care contributing to higher morbidity and mortality, and thus also impact economies through increased health-related absenteeism and understaffing. Underfunding of healthcare systems and the impacts thereof are a concern across low-, middle- and high-income countries.
How to obtain this SONAR report:
The English version of the 2024 SONAR report is available to download here.
Swiss Re SONAR 2024: New emerging risk insights – Swiss Re is hosting a special hybrid event on 17 June, 14:30 CEST, featuring Swiss Re Group Chief Risk Officer Patrick Raaflaub to mark the release of the SONAR 2024 report on new emerging risk insights. You can register here.
