The FFA publishes the results of the second edition of the risks barometer for the French insurance and reinsurance sector. Cyber risk remains at the top of the list, while the risk of social tension has grown significantly and is now the second most significant short-term risk.
Cyber risk and the risk of social tension are the principal short-term risks
Last year saw an increase in large-scale cyber attacks, with consequences for data protection. Against this background, the insurance and reinsurance industry has supported businesses in putting preventive measures in place.
The risk of social tension is the second most significant major risk identified by insurers and reinsurers. Its occurrence in the medium term was predicted in the 2018 edition of this barometer.
A financial system crisis, fuelled by the return of volatility to the markets in 2018, was in third place.
Other risks that could impact their business in the short term include: changes to accounting rules, and in particular the forthcoming application of the IFRS 17 rules in terms of impact on businesses strategies; global warming, the cause of the increase in devastating natural events; and European political risk, demonstrated by the rise in populist movements and Brexit.
In the medium term, cyber risk and the risk of global warming are the highest risks
The risks intensify at a horizon of five years: the potential impact of cyber risk, global warning and a financial systems crisis is even bigger. This trio of major risks is the same as that identified in 2018.
This barometer also throws light on the new challenges facing the industry. Emerging risks can lead to a wider range of insurance products being offered, with new areas of cover being developed.
According to Bernard Spitz, President of the FFA: “Emerging risks are challenges for insurers and reinsurers, whose job it is to push back the boundaries of insurability and provide new services to individuals and businesses.”
Risk managers from 41 insurance and reinsurance companies, accounting for 97% of insurers’ investments in France at the end of 2017, were asked to classify 23 emerging risks, the growth and evolution of which are not currently taken into consideration by companies. These risks, comprising six categories (economic, environmental, social, technological, political and regulatory) were classified by their probability of occurrence and their potential short- and medium-term impacts.