February 2024 Edition

No road has no risk

Machiavelli, an Italian political philosopher once said: “Never was anything great achieved without danger”, but today it seems even achieving the average has its own major challenges. This can clearly be seen in the rise of Cyber Risk, seen by the Allianz Risk Barometer as the top risk in Africa and the Middle East, going hand in hand with Business Interruption. Results from the Global Risks Report, a collaboration between Marsh, WEF and Zurich Insurance, is a bit more nuanced, and perhaps easier to fit into the everyday business and societal world. Here we see Extreme Weather, Mis/Disinformation (technology-generated), society polarisation and a cost of living crisis as top.

My conversations with the companies involved with the production of this report highlighted the need for the insurance industry to take the lead in collaboration, innovation and risk capacity building to ensure global stability in the face of risk for which we have very little past experience or large scale modelling. My personal pick, which I can clearly see when I join the dots over the past few years, is that the dark horse in the room is Business Interruption.

It does not matter whether we cover it or not, whether we bring in exclusions or set limitations. The bottom line is that, when large scale, wide spread business interruption strikes, no matter what the cause (weather/cyber/geopolitical etc), society, business and the insurance industry, will have to deal with the fall out. Now more than ever, the insurance industry will have to be the one finding the silver bullet.