Lloyd’s Finds 25 New Risks for Industry to Worry About

As if the insurance industry didn’t already have a heaping plate full of risks, Lloyd’s has summarized the results of a scientific conference and added 25 more.

An article on its web site (www.lloyds.com) analyzes the “invasive potential of artificial life and so-called biomimetic robots … as well as risks associated with insect like mini robots. The list includes threats linked to nanotechnology and biotechnology.”

Lloyd’s explained that compiling the list involved “an exercise called horizon scanning.” It also singles out “hazards associated with climate change such as coastal flooding, increased fire risk, and the growing demand for biofuels and biomass.”

Lloyd’s identified the source of these scary scenarios as coming from an on line publication from the British Ecological Society’s Journal of Applied Ecology, “following a two-day meeting held in Cambridge involving 35 representatives from government, environmental NGOs and academia.”

The list, in summary form, is as follows:
1. Nanotechnologies
2. Invasive potential and possible ecosystem impacts of artificial life and biomimetic robots
3. Unintended consequences of pathogens developed by modern biotechnology methods
4. Direct impact of novel pathogens
5. Impacts of control efforts for novel pathogens
6. Facilitation of non-native invasive species through climate change
7. Large-scale restoration for iconic wildlife and habitats
8. Action to facilitate species range change in the face of climate change
9. Frequency of extreme weather events
10. Geo-engineering the planet to mitigate the effects of climate change
11. Implications for biodiversity of the adoption of an ecosystem approach
12. Increased fire risk
13. Increasing demand for biofuel and biomass
14. Step change in demand for food and hence pressure on land for agriculture
15. Ocean acidification
16. Reduction of coldwater continental shelf marine habitats
17. Significant increase in coastal and offshore power generation
18. Extreme high-water coastal events
19. Sea level rise resulting in loss of coastal and intertidal habitats
20. Dramatic changes in freshwater flows
21. Nature conservation policy and practice may not keep pace with environmental change
22. Internet and new e-technologies connect people with information on the environment
23. Decline in engagement with nature
24. Adoption of monetary value as the key criterion in conservation decision-making
25. Public antagonism towards wildlife due to perceived human health threat

“We hope that horizon scanning will help cut down the number of times that policy dealing with foreseeable issues needs to made in the absence of the appropriate research,” the lead author, Professor Bill Sutherland of the University of Cambridge, stated.

The report noted that the “implications of not identifying issues that may be foreseeable is illustrated by the contentious responses to GM crops and by the challenges posed by avian flu and climate change.” Sutherland added: “It isn’t always possible to predict the consequences of new scientific methods, but you can usually identify the possible risks.”

The Cambridge team’s work on horizon scanning ties in with Lloyd’s 360 Project, which is helping to drive debate on emerging risk. “The difficulty is that there is so much ‘noise’ it is hard to sift through the many threats that are raised to identify which ones need more research,” Trevor Maynard, Manager of Emerging Risks at Lloyd’s, noted. “The Cambridge team’s approach provides a useful filter.”

Maynard also discussed Lloyd’s role in contributing to horizon scanning through its work with the Lighthill Risk Network, a not-for-profit organization that brings together scientific researchers, the insurance industry, government and third party organizations to exchange risk-related expertise. Lloyd’s recently hosted a Lighthill conference on nanotechnology.

“The list produced by the horizon scanning exercise was interesting because it contained threats with obvious implications for insurers – such as an increase in extreme weather events. But it also produced other threats with less obvious implications,” Maynard added. “For example, the introduction by companies of invasive plant species to meet demands for biofuels and whether any liability issues might arise as a consequence.”

He also indicated that the list “poses important questions related to liability and insurability. The risks attached to geo-engineering – fertilizing the oceans to encourage plankton growth and increase the size of the carbon sink, for example – are huge. We don’t fully understand the repercussions of such actions so insurers will need to think carefully about the extent to which it is insurable.”

Source: Lloyd’s