The “Evolving Risks” working group of the FFA’s Risk Analysis Committee has prepared the first emerging risks barometer for the insurance industry. This risk mapping identifies the emerging risks that could significantly affect the insurance and reinsurance sector in France.
The work is based on a survey1 of risk managers at the leading insurance and reinsurance companies in France.
The emerging risks identified fall into six categories: economic, environmental, political, social, technological and regulatory. They have been classified according to their likelihood of occurrence and their potential short- and medium-term impact (1 and 5 years).
Cyber risk emerges as the principal risk for insurers and reinsurers between now and the end of 2018 because of the scale of its potential economic and geopolitical consequences. The many attacks against businesses in 2017 support this assessment. The Cyber Risk Committee of the French legal think tank, Le Club des Juristes, chaired by Bernard Spitz, has just published the report “Insuring against Cyber Risk”, and makes a series of recommendations to improve prevention of and insurance against this risk.
Among the other risks that could affect their activity in the short term, insurers and reinsurers also identified the following: uncertainties concerning the financial system as a result of excess liquidity feeding speculative bubbles; climate change, which is a cause of major natural disasters; the impact of the avalanche of regulations to which the insurance industry is subject; the very tense climate in international politics; and, over a horizon to 2022, the disruption caused by new technologies such as blockchain, platforms or artificial intelligence.
The FFA’s emerging risks barometer will be produced each year and will feed into the ORSA (Own Risk and Solvency Assessment) exercises insurers and reinsurers are obliged to carry out under Solvency II. This risk mapping is therefore intended to identify factors that could affect the financial situation or solvency of insurance companies. It will enable them to integrate the most significant emerging risks into the management of their development strategies.
According to Bernard Spitz, President of the FFA: “This risk mapping demonstrates insurers’ and reinsurers’ commitment to continually anticipating and managing risks.”
1Survey carried out in late 2017 involving the 30 leading insurance and reinsurance companies, which between them accounted for turnover of €227 bn and total investments of €2,242 bn in 2016.
Appendix – First emerging risks barometer for the insurance industry – 1/2