Assessing these emerging risks will help insureds prepare for the future
Identifying the threats that matter to insureds today will hopefully stimulate a debate about how they can be mitigated for tomorrow.
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The technological revolution, climate change, pandemics, and increasing geopolitical instability make it harder for policymakers, businesses, and individuals to anticipate coming changes, overcome challenges, and grasp opportunities.
Therefore, for the seventh consecutive year, AXA sought to highlight experts’ perceptions of future risks by conducting a structured survey of more than 2,700 risk experts from 54 countries. In addition, this year, AXA worked with the research specialist Ipsos to gauge the perception of the general public by surveying close to 20,000 people. AXA has also continued its partnership with Eurasia Group for its unique take on geopolitical themes.
This edition of AXA’s Future Risks Report was written in unprecedented circumstances. As this report was being written in September 2020, more than 33 million people worldwide had been infected, and more than one million had died as a result of COVID-19. Countries that had initially brought the virus under control were starting to experience a resurgence in cases.
Emerging global risks
The onset of COVID-19 transformed pandemics and infectious diseases — previously an important yet perhaps distant and unlikely risk — into an immediate and deadly threat to the entire global population. As a result, surveyed experts today rank pandemics and infectious diseases as the emerging risk that is the greatest threat to society in the next five to ten years, up from eighth place last year. In parallel, the general public ranks health concerns as the risk to which they feel most vulnerable, alongside computer-related risks.
As pandemics and infectious diseases rose up the agenda, climate change slid for the first time since 2015, from the first to the second-most-important emerging risk to society. But more significantly, the breakdown of the survey results by country reveals strong disparities in the perception of climate-related risks. While European experts continue to identify climate risks as the most pressing threat to society, the number of North American based experts that consider climate change to be a top emerging risk fell to 46%, from 71% last year. In parallel, experts located in Asia are less concerned about the impact of climate change than the global average.
The countries that downplay the risk of climate change are among those that contribute most to its acceleration and are most likely to feel its effects. There is, therefore, a real danger that in focusing only on COVID-19, the threat that is right in front of us, other long-term challenges are overlooked by the general public and decision-makers. Similarly, the survey data also shows that risks related to natural resources are decreasing in importance, even though the biodiversity crisis is accelerating.
In many ways, the crisis has been acting as an accelerant of existing or nascent trends. All of the emerging risks that experts consider most important today have been reshaped or exacerbated by COVID-19. Cybersecurity risk, which experts rank as third-most important, has intensified as COVID-19-related phishing emails have surged and as employees have been using personal devices for work. Geopolitical instability, which experts rank as fourth-most-important, has heightened as some governments exert control over medical supplies and protect strategically important businesses. Even social discontent and local conflicts, experts’ fifth-most important risk, could surge as COVID-19 exposes and widens economic and social inequality.
That’s all before taking into account the devastating impact of COVID-19 and resulting lockdowns on the economy; experts consider macroeconomic risk to be the seventh-most-important risk to society. In addition to the direct impact of lockdowns on economic activity, there’s a danger that the economic fallout will worsen if the pandemic causes prolonged feelings of uncertainty and vulnerability among the general population, which, in turn, leads to less consumption. Our survey already finds evidence of this. Almost three-quarters of the general public say people feel more vulnerable compared with five years ago.
These examples illustrate the growing connectivity of risks, which we presented as one of the main findings of last year’s report. This interlinking requires a global, interdisciplinary, and multi-stakeholder approach to prevention and protection.
In addition to uncovering the emerging risks considered most important today, this report also identifies the risks that have slipped under the radar. Last year, we highlighted pandemics and infectious diseases as an overlooked risk. This year, we believe mental health and misinformation are important risks that deserve focus and have not yet fully captured the attention of experts.
The AXA report endeavors to identify which risks matter to experts and the general public. The findings will hopefully stimulate a debate about how they can be mitigated. In doing so, we hope to further our purpose: act for human progress by protecting what matters.
Alban de Mailly Nesle is the chief risks & investment officer at AXA Group. This article was first published by AXA and is republished here with consent.
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