Swiss Re “Risk Perception” Report Finds Accelerating Changes Complicate Risk Management

A new report in Swiss Re’s “Risk Perception” series finds that change is “continually accelerating, possible consequences tend to be greater and increasing uncertainty is rendering risks less calculable.”

In order to manage “future risks successfully, we must learn to recognise the changes in the risk landscape earlier and influence them systematically in their infancy,” Swiss Re said. “The risk landscape of the future, the latest title in the Risk perception series published by Swiss Re, examines how today’s society can shape the future by taking advantage of its opportunities and mastering the risks they entail. This will require a more active dialogue among the individual stakeholders.”

The report points out that the real difficulty of risk assessment lies in the accelerated change of complex systems. “The faster the risk landscape changes, the more risks remain entirely unidentified for the time being or become incalculable, because it is no longer just individual parameters but entire systems that keep changing with increasing speed.”

The insurance industry, according to the report, is used to “consolidating individual risks into manageable bundles. In the insurance context, these translate to portfolios or – more generally – to a risk landscape, i.e. the totality of risks faced by a given community.

“The authors of the new publication show that a given risk landscape is never viewed in isolation from individual requirements and experiences. As such, the insurers’ risk landscape differs, for example, from that of parents, manufacturers, or environmentalists. What all risk landscapes have in common is that, rather than occurring by chance, they are determined by the way a given community deals with risks.”

Swiss Re’s publication “shows that it is possible both to understand and consciously configure the risk landscape,” but doesn’t promise any ready-made solutions.” In its preface, Chief Risk Officer Bruno Porro explained why: “We must learn first how to deal both with the many challenges dictated by the ever rate of change and the new and different risks associated with it. Being prepared to face up to many unanswered and in some cases unsettling questions will also point us towards solutions. For whatever the face of the future, tackling it will take courage.”

Further information and downloadable copies of the report in English and German may be obtained through the company’s Web site at: www.swissre.com.