Patrick Raaflaub, Group Chief Risk Officer at Swiss Re, emphasises the importance of promptly identifying minor risks and initiating early discussions on effective management strategies to prevent them from becoming unmanageable in the future.
Raaflaub illustrates this point with the Schweizerhalle catastrophe, which, nearly four decades later, still demonstrates the consequences of neglecting risks that can trigger chain reactions during emergencies, amplifying their destructive potential.
For example, while climate risks are widely acknowledged as a major threat, Swiss Re’s SONAR report explores less-discussed impacts of a warming planet. With climate-related hazards increasing in frequency and intensity, critical systems such as energy, water infrastructure, and transportation networks are increasingly vulnerable.
Climate change not only necessitates enhancing the resilience of essential resource delivery systems but also poses a growing risk to international security. Weather-related food insecurity is increasingly recognized as a global challenge affecting both developing and developed countries, impacting economic, social, and political stability and driving human migration across borders.
Supply chain vulnerabilities have resurfaced prominently since COVID-19. Initially, businesses prioritised bolstering supply chain resilience after critical health supplies faced bottlenecks. However, cost-cutting priorities have quickly resurfaced, exacerbated by heightened geopolitical tensions that influence global manufacturing decisions. Consequently, resilience against business interruption risks is diminishing, demanding heightened vigilance from insurers.
Emerging technologies like artificial intelligence also introduce new risks. Swiss Re’s SONAR report addresses the growing prevalence of cyber-enabled organised crime. The costs associated with cyberattacks are substantial, underscoring the increasing need for sophisticated cybersecurity measures.
Raaflaub stressed, “Even if risks haven’t fully taken shape, it’s important to call them out at the earliest stage possible, to inspire risk managers and others to begin grappling with them. After all, these risks may eventually become a big deal for their operations, or their daily lives.”
“We neglect risks at our own peril. That’s where SONAR comes in – to help identify them, to stimulate early discussion and debate, so when they finally begin to dominate our risk agenda, we’ll be better able to tackle them before risk turns into tragedy. We don’t aim to be the closing word on emerging risks. We aim to be the ice breaker,” Raaflaub concluded.
