December 2021 Edition

2021: Not just another year

Not in our wildest dreams could we have foreseen how things will play out. The world has changed, not just due to COVID, but in many other positive and negative ways. The question is whether we will optimize the lessons that can be learnt. Where do we find ourselves at this point?

COVID 19: One thing is clear. We do not understand this virus yet and we do not have a proven strategy to deal with it. As I write this:

• Austria is going back into full lockdown, despite a high percentage of their population having been vaccinated
• Many other countries across the globe are experiencing rising infections, again.
• Africa has not been the big COVID killing fields everyone predicted
• Global populations are starting to turn their backs on lockdown strategies, taking to the streets in violent demonstrations
• Most countries are already far in the process of distributing booster shots
• Oral vaccinations or treatments have come onto the market

Cyber Threat: It is estimated that Cyber crime cost the globe USD6trillion in 2021 and will cost the world USD 10,5trillion annually, by 2025. (Cybercrime Ventures). This is exponentially more than the damage inflicted by natural catastrophes and more than the total global trade in all drugs. It is estimated that the Deep Web is 5 000 times bigger than the surface web, and we all know how massive the surface web seems to be.

Just like the COVID virus, the cyber threat is pretty much a “learn as you go” environment for everyone, from authorities to business, individuals and the insurance industry. The reality is that the potential devastation that can be caused by a Cyber pandemic that spans the globe in a “short, deep and widespread infection” is unfathomable at this stage. Just in South Africa, we have seen our ports authority systems ransomed with massive ripple effects into industry supply chains and we have also seen hospital networks ransomed. Globally we have seen electricity and healthcare networks shut down.

Climate Change: Unprecedented climate events, from record heatwaves in Canada and Europe to massive floods in Central Europe, droughts and fires. Again, just as we think we are starting to understand the patterns, there are outlier events. The writing is on the wall that we have overstepped the boundaries already and that we are dealing with exponential changes now, not just the gradual increases of the past.

Furthermore, it is clear that current city and infrastructure design is not up to date with the fast changing natural environment.

Socio-economic challenges: The highest unemployment rate in our history, directly linked to soaring crime. The looting in July this year is a clear manifestation of both. Poverty and unemployment is a lethal cocktail that feeds off each other in a downward spiral, requiring systemic interventions to turn the tide. Our political landscape is unfortunately not assisting with stemming this tide.

Business and the Insurance Industry: In South Africa, the only way out of our mess is with economic growth, leading to increased employment. That should be the main focus for Government and Industry. The role of insurance is to provide certainty, stability and sustainability, against the backdrop I sketched above.

The question is whether the industry will be able to keep up with the fast changing world of risk and, if not, where will that stability and sustainability come from? We certainly have our jobs cut out for us.