The Global Insurance Giant Lists Climate Change and Instability Among Its Top Risks
In an era marked by unprecedented challenges, AXA, one of the world’s leading insurance companies, has released its 2024 Future Risks Report, highlighting climate change, cybersecurity threats, and geopolitical instability as the top three risks facing the globe. Conducted by Ipsos, this comprehensive survey gathered insights from over 3,000 experts and 19,000 members of the public across 50 countries, revealing a complex landscape of interconnected threats that the insurance industry must navigate.
The Era of Polycrisis
The report underscores the notion of an "era of polycrisis," where multiple global threats intertwine, amplifying one another and creating a uniquely intricate environment for insurers, policymakers, and communities alike. This interconnectedness means that addressing one risk often requires consideration of others, making risk management more challenging than ever.
What Are the Top Risks?
Climate Change
For the third consecutive year, climate change has emerged as the foremost global concern. This issue resonates deeply with both experts and the general public, ranking as the number one priority across all geographic areas surveyed. The visible impacts of climate change—ranging from devastating floods and wildfires to health risks associated with extreme temperatures—are prompting insurers to prioritize risk management and prevention strategies. As the frequency and severity of climate-related events increase, the insurance industry is compelled to adapt and innovate in its approach to underwriting and claims.
Geopolitical Instability
Geopolitical tensions are another critical layer of the polycrisis, with high-profile conflicts in regions such as the Middle East and Eastern Europe, alongside political divisions in traditionally stable economies. AXA’s findings indicate that these global divisions are reshaping trade dynamics, supply chains, and economic stability, contributing to a volatile landscape. Insurers must grapple with the implications of these geopolitical shifts, which can lead to increased claims and necessitate a reevaluation of risk assessment models.
Evolving Cyber Risks
As the digital landscape evolves, cybersecurity remains a significant threat. The frequency and sophistication of cyber-attacks are on the rise, presenting new challenges for businesses and individuals alike. The advent of artificial intelligence (AI) adds another layer of complexity; while it offers promising tools for risk management, it also introduces fresh threats, particularly in the realm of misinformation. Insurers must stay ahead of these evolving cyber risks to protect their clients and maintain trust in their services.
What Risks Are Down Compared to Last Year?
The 2024 Future Risks Report also reveals interesting shifts in the rankings of perceived risks. AI and big data, which were absent from the 2022 list, surged to fourth place last year and have maintained that position. In a surprising turn, pandemics and infectious diseases have dropped from fifth place in 2022 to ninth place this year, despite ongoing concerns about new strains of flu and other health threats. Climate change, however, remains a persistent concern, having held the top position since 2018, with the exception of 2020 when COVID-19 temporarily displaced it.
The General Public’s Expectations of Insurers
The report highlights a significant expectation from both experts and the general public regarding the role of insurers in safeguarding against future risks. A staggering 91% of experts and 72% of the general public believe that insurers will play a crucial role in risk mitigation moving forward. Frédéric de Courtois, AXA’s group deputy CEO, emphasized the importance of agility in the insurance sector, stating, “It is crucial for insurers to maintain the agility to navigate increasingly dynamic environments and ensure the protection of their operations and their clients.”
As risks become more intricate, the insurance industry must cultivate new competencies and adopt a more comprehensive approach to underwriting and risk management. This evolution is essential not only for the sustainability of the insurance sector but also for the broader goal of building resilient communities in the face of mounting global challenges.
Conclusion
The 2024 Future Risks Report from AXA serves as a clarion call for the insurance industry and society at large. As climate change, geopolitical instability, and cybersecurity threats loom large, the need for proactive risk management and innovative solutions has never been more critical. By understanding the interconnected nature of these risks and responding with agility and foresight, insurers can help safeguard individuals, businesses, and communities against the uncertainties of the future.
In this complex landscape, collaboration among insurers, policymakers, and the public will be essential to navigate the challenges ahead and build a more resilient world.