What are the risks of tomorrow? And what risks today are at the very fringes of insurability? Beyond the risks clearly associated with classic insurance lines of business, these are the special and emerging risks that challenge us and our customers.
There are many kinds of emerging risks. They can be caused by anything from new technologies to legislative changes to changes in the weather and may be developing or can even already exist but not yet be fully understood. However, they are likely to become significant very soon.
Special risks, on the other hand, have usually been known for a long time but still remain difficult to insure using classic forms of cover or mitigage using standard loss prevention. Non-physical business interruption and other forms of pure financial loss, for example, remain a great challenge but must be constantly revisited and remodeled so that both the insurer and insured are aware of their exposures to these risks when developing their risk solutions.
Both kinds of risks are very difficult to quantify but have a large loss potential. That is why a core function of Allianz Risk Consulting is to work closely with our underwriting departments to monitor and assess these risks and their developments closely in order to be able to react quickly and appropriately.
Many sources of emerging and special risks are well known. These include:
Climate change – bringing greater weather volatility but also a variety of public responses
New regulations – which can impact everything from liability to structural stability
Market volatility – leading to such things as loss of profits, shareholder lawsuits or foreign exchange losses
Medical risks – whether new phenomena such as endocrine disruptors or new studies showing substances to be harmful that were once thought safe
Evolving IT – both the technology itself and its ever-growing role in business
Political risks – anything from social unrest and voter tasts to regime change
New technologies – such as nanotechnology and renewable energy
Public health risks – pandemics, industrial contamination, growing obesity levels and other widespread health phenomena
CO2/emission trading – an increasing risk as the markets get tighter and prices rise
Space weather – a growing concern for all manner of infrastructure
Beyond that, there are the numerous risks of tomorrow and the day after that have not yet been identified.
Our clients are looking for risk mitigation solutions for all these “new” risks. Allianz Global Corporate & Specialty analyzes and assesses emerging and special risks, sharing this knowledge on a regular basis in client meetings, publications and this website.
In this way, clients can take a proactive approach to managing those known and unknown risks, and we contribute to the overall discussion of these perils in society.