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Transcript of The Never Ending Era of Uncertainty: Managing Risk in a Volatile World Northeast Business and...
The Never Ending Era of Uncertainty:
Managing Risk in a Volatile WorldNortheast Business and Economics Association
Port Jefferson, NYOctober 26, 2012
Download at www.iii.org/presentationsRobert P. Hartwig, Ph.D., CPCU, President & Economist
Insurance Information Institute 110 William Street New York, NY 10038Tel: 212.346.5520 Cell: 917.453.1885 [email protected] www.iii.org
2
Thank You: Bob and Rachel Hartwig(aka Dad and Mom)
3
What in the World Is Going On?
Is the World Becoming a Riskier, More Uncertain Place?
All Major Categories of Risk Influence Economies on a Global Scale
4
Uncertainty, Risk and Fear Abound
Never Ending Echoes of the Financial Crisis European Sovereign Debt & Eurozone Crises The “Fiscal Cliff”: US Debt and Budget Crisis Unintended Consequences of (Over)Regulation “Hard Landing” in China Housing Crisis Political Gridlock: US, Europe Political Upheaval in the Middle East Resurgent Terrorism Risk Diffusion of Weapons of Mass Destruction Cyber Attacks Record Natural Disaster Losses Climate Change Environmental Degradation Income Inequality Insomnia??? Are “Black Swans”
everywhere or does it just seem
that way?
5
Hurricane Sandy:Storm of Historic Proportions?
Source: NOAA (as of 11 AM Oct. 26, 2012); Insurance Information Institute.
Hurricane Sandy is just the latest in a
long list of unusual and
severe weather
events. What is the cause?
Can the risk of events like Sandy be
managed?
6
5 Major Categories for Global Risks, Uncertainties and Fears
1. Economic Risks
2. Geopolitical Risks
3. Environmental Risks
4. Technological Risks
5. Societal Risks
Source: World Economic Forum, Global Risks 2012; Insurance Information Institute.
While risks can be broadly
categorized, none are mutually exclusive
7
Top 5 Global Risks in Terms of Likelihood, 2007—2012
Source: World Economic Forum, Global Risks 2012; Insurance Information Institute.
In 2012, concerns
over income
disparity and fiscal
imbalances displaced weather
and water concerns, as ranked
by likelihood
Concerns Shift Considerably Over Short Spans of Time. Shift in 2012 to Economic Risks and Away from Environmental Risks
8
Top 5 Global Risks in Terms of Impact,2007—2012
Source: World Economic Forum, Global Risks 2012; Insurance Information Institute.
Concerns Over the Impacts of Economics Risks Remained High in 2012, but Societal Risks Displaced Environmental Risks
Impacts from
economic and
societal risks were
of the greatest
concern in 2012
9
Economic Risk: Foremost on the Minds in “Advanced” Economies
Economic Risks Chronic fiscal imbalances Severe income disparity Extreme volatility in energy
and food prices Recurring liquidity crises Major systemic failure Adverse unintended
consequences of regulation Unmanageable in/deflation Chronic labor mkt. imbalances Hard landing of emerging economy
Source: World Economic Forum, Global Risks 2012; Insurance Information Institute.
Economic Risk Landscape
10
US Real GDP Growth*
* Estimates/Forecasts from Blue Chip Economic Indicators.Source: US Department of Commerce, Blue Economic Indicators 10/12; Insurance Information Institute.
2.7
%0
.5%
3.6
%3
.0%
1.7
%-1
.8%
1.3
%-3
.7%
-5.3
%-0
.3%
1.4
%5
.0%
2.3
%2
.2%
2.6
%2
.4%
0.1
%2
.5%
1.3
%4
.1%
2.0
%1
.3%
2.0
%1
.8%
1.7
%2
.2%
2.6
%2
.8%
-8.9%
4.1
%1
.1%
1.8
%2
.5% 3.6
%3
.1%
-9%
-7%
-5%
-3%
-1%
1%
3%
5%
7%
2
00
0
2
00
1
2
00
2
2
00
3
2
00
4
2
00
5
2
00
6
07
:1Q
07
:2Q
07
:3Q
07
:4Q
08
:1Q
08
:2Q
08
:3Q
08
:4Q
09
:1Q
09
:2Q
09
:3Q
09
:4Q
10
:1Q
10
:2Q
10
:3Q
10
:4Q
11
:1Q
11
:2Q
11
:3Q
11
:4Q
12
:1Q
12
:2Q
12
:3Q
12
:4Q
13
:1Q
13
:2Q
13
:3Q
13
:4Q
Slow Growth Is Likely to Persist Well into 2013. Recession Will Be Averted Barring a Total Political Failure Pushing Us Over the “Fiscal
Cliff”
Real GDP Growth (%)
Recession began in Dec. 2007. Economic toll of credit crunch, housing
slump, labor market contraction has been
severe but modest recovery is underway
The Q4:2008 decline was the steepest since the Q1:1982 drop of 6.8%
2012 is expected to see slow growth lasting into 2013; Fed’s QE3 could
push 2013 GDP up 0.2%
11
Real GDP Growth Forecasts: Major Economies: 2011 – 2013F
Sources: Blue Chip Economic Indicators (9/2012 issue); Insurance Information Institute.
1.7%
0.7% 1.
5%
3.1%
2.2%
-0.3
%
0.9%
7.8%
2.3%
2.1%
1.1%
0.3% 1.
1%
8.2%
1.4%
9.2%
-0.7%-0.5%-2%
0%
2%
4%
6%
8%
10%
US UK Euro Area Germany China Japan
2011 2012F 2013F
Growth Prospects Vary Widely by Region: Stabilizing in the US, Mild Recession in the Eurozone, A “Soft Landing” in China and India,
Reconstruction Stimulus in Japan and Modest Growth in America’s Largest Trading Partners—Canada and Mexico.
The Eurozone and UK are in
recession. Both should end by early
2013
China growth has slowed, but remains strong in an expected “soft landing”
scenario
Tepid US recovery
continues
Rebuilding acts as a
stimulus to Japanese economy
(4.0)
(2.0)
0.0
2.0
4.0
6.0
8.0
10.0
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
F1
3F
Advanced economies Emerging and developing economies World
Source: International Monetary Fund, World Economic Outlook , Oct. 2012; Ins. Info. Institute.
Emerging economies (led by China) are expected to grow by 5.3% in 2012 and
5.6% in 2013.
GDP Growth: Advanced & Emerging Economies vs. World, 1970-2013F
Advanced economies are expected to grow at a sluggish pace of 1.3% in
2012 and 1.5% in 2013.
World output is forecast to grow by 3.3% in 2012 and 3.6% in 2013. The world economy shrank by 0.6% in
2009 amid the global financial crisis
GDP Growth (%)
13
Global Real (Inflation Adjusted) NonlifePremium Growth: 1980-2010
Source: Swiss Re, sigma, No. 2/2010.
Nonlife premium growth in emerging markets has
exceeded that of industrialized countries in
27 of the past 31 years, including the entirety of the
global financial crisis..
Real nonlife premium growth is very erratic in part to inflation volatility in emerging markets as
well as a lack of consistent cyclicality
Average: 1980-2010
Industrialized Countries: 3.8%
Emerging Markets: 9.2%
Overall Total: 4.2%
14
Regulatory Risk: Financial Sector in Consumed with Post-Crisis Concerns
Source: Insurance Information Institute.
Capital Adequacy, Quality, Liquidity,
Leverage, Prudential Oversight
Dodd-Frank
Basel III
Solvency II
Systemic Importance
US
Global
15
Geopolitical Risk: Foremost on the Minds in “Emerging” Economies
Geopolitical Risks Pervasive entrenched corruption Critical fragile states Terrorism Failure of diplomatic conflict
resolution Global governance failure Entrenched organized crime Widespread illicit trade Diffusion of WMD Unilateral resource
nationalization Militarization of space
Source: World Economic Forum, Global Risks 2012; Insurance Information Institute.
Geopolitical Risk Landscape
16
Political Risk in 2011/12: Greatest Business Opportunities Are Often in Risky Nations
Source: Maplecroft
The fastest growing markets are generally
also among the politically riskiest,
including East and South Asia
Heightened risk has economic and insurance implications
Much of the middle East and North Africa have
experienced and continue to experience
political turmoil
17
The “Arab Spring” Has Increased Uncertainty in an Already Volatile Part of the World
Source: Wikipedia as of Nov. 7, 2011; Insurance Information Institute research.
Some energy-rich nations have been among the most
unstable in 2011/12
Longer-run, significant
investment and insurance
opportunities exist throughout
the region
Government overthrown Sustained civil disorder and governmental changes Protests and governmental changes Major protests Minor protests Protests outside the Arab world
Arab Springالربيع العربي
18
Terrorist Risk Index, 2011
Sources: Maplecroft Terrorism Risk Index; Guy Carpenter; Insurance Information Institute.
The threat of terrorism is highest in
South Asia, Russia, the Middle East and Central
and East Africa
The US is still
considered to be at
“Medium Risk” for a
terrorist attack
19
Global Terrorist Attacks and Deaths, 2004-2011
Sources: National Counterterrorism Center, 2011 Report on Terrorism; Guy Carpenter; Insurance Information Institute.
The number of terrorist attacks
globally fell by 11.7% in 2011 while the number of deaths dropped by 5.0%
2011
10
,28
3
12
,53
3
11
,64
1
13
,19
3
20
Frequent Reminders of Terrorist Threat: New and Old
Sources: Insurance Information Institute.
In Oct. 2012, the FBI arrested a 21-year old Bangladeshi man who
wanted to bomb the NY Federal Reserve
building in Lower Manhattan
Freedom Tower under construction
in Oct. 2012. Insurance money is the primary source
of funds for rebuilding the WTC
site
Life$1.2 (3%)
Aviation Liability
$4.3 (11%)
Other Liability
$4.9 (12%)
Biz Interruption $13.5 (33%)
Property -WTC 1 & 2*$4.4 (11%) Property -
Other$7.4 (19%)
Aviation Hull$0.6 (2%)
Event Cancellation
$1.2 (3%)Workers Comp
$2.2 (6%)
Total Insured Losses Estimate: $40.0B***Loss total does not include March 2010 New York City settlement of up to $657.5 million to compensate approximately 10,000 Ground Zero workers or any subsequent settlements.
**$32.5 billion in 2001 dollars.
Source: Insurance Information Institute.
Loss Distribution by Type of Insurancefrom Sept. 11 Terrorist Attack ($ 2011)
($ Billions)
Terrorism Violates Traditional Requirements for Insurability
Requirement Definition Violation
EstimableFrequency
Insurance requires large number of observations to develop predictive rate-making models (an actuarial concept known as credibility)
Very few data pointsTerror modeling still in infancy, untested.Inconsistent assessment of threat
EstimableSeverity
Maximum possible/ probable loss must be at least estimable in order to minimize “risk of ruin” (insurer cannot run an unreasonable risk of insolvency though assumption of the risk)
Potential loss is virtually unbounded.Losses can easily exceed insurer capital resources for paying claims.Extreme risk in workers compensation and statute forbids exclusions.
Source: Insurance Information Institute
Requirement Definition Violation
Diversifiable Risk
Must be able to spread/distribute risk across large number of risks“Law of Large Numbers” helps makes losses manageable and less volatile
Losses likely highly concentrated geographically or by industry (e.g., WTC, power plants)
Random Loss Distribution/Fortuity
Probability of loss occurring must be purely random and fortuitousEvents are individually unpredictable in terms of time, location and magnitude
Terrorism attacks are planned, coordinated and deliberate acts of destructionDynamic target shifting from “hardened targets” to “soft targets”Terrorist adjust tactics to circumvent new security measuresActions of US and foreign govts. may affect likelihood, nature and timing of attackSource: Insurance
Information Institute
Terrorism Violates Traditional Requirements for Insurability (cont’d)
24
Environmental Risk: Vulnerability and Susceptibility Vary Across Globe
Environmental Risks Rising greenhouse gas emissions Failure of climate change
adaptation Land/water use mismanagement Mismanaged urbanization Antibiotic-resistant bacteria Persistent extreme weather Species overexploitation Irremediable pollution Vulnerability to geomagnetic storms
Source: World Economic Forum, Global Risks 2012; Insurance Information Institute.
Environmental Risk Landscape
25
Top 16 Most Costly World Insurance Losses, 1970-2011**
(Insured Losses, 2011 Dollars, $ Billions)
*Average of range estimates of $35B - $40B as of 1/4/12; Privately insured losses only.**Figures do not include federally insured flood losses.Sources: Swiss Re sigma 1/2011; Munich Re; Insurance Information Institute research.
$11.9$13.0 $13.0$13.1
$19.1$21.3
$24.0$25.0
$37.5
$47.6
$7.7 $8.1 $8.3 $8.5 $9.3 $9.7
$0$5
$10$15$20$25$30$35$40$45$50
Hugo (1989)
WinterStormDaria(1991)
ChileQuake(2010)
Ivan (2004)
TyphoonMirielle(1991)
Charley(2004)
Wilma(2005)
ThailandFloods(2011)
NewZealandQuake(2011)
Ike (2008)
Northridge(1994)
SpringTornadoes/
Storms(2011)
WTC TerrorAttack(2001)
Andrew(1992)
JapanQuake,
Tsunami(2011)*
Katrina(2005)
5 of the top 14 most expensive
catastrophes in world history have occurred within the past 2 years
Taken as a single event, the Spring 2011 tornado and
thunderstorm season would likely become the 5th
costliest event in global insurance history
26
Global Catastrophe Loss Summary: 2011 Was a Global Record Breaker
2011 Was the Highest Loss Year on Record for Economic Losses Globally
Extraordinary accumulation of severe natural catastrophe: Earthquakes, tsunami, floods and tornadoes are the primary causes of loss
$380 Billion in Economic Losses Globally (New Record)
New record, exceeding the previous record of $270B in 2005
$105 Billion in Insured Losses Globally
2011 losses were 2.5 times 2010 insured losses of $42B
Second only to 2005 on an inflation adjusted basis (new record on a unadjusted basis)
Over 5 times the 30-year average of $19B
$72.8 Billion in Economic Losses in the US
Represents a 129% increase over the $11.8 billion amount through the first half of 2010
$35.9 Billion in Insured Losses in the US Arising from 171 CAT Events
Fifth highest year on record
Represents 51% increase over the $23.8 billion total in 2010
Source: Munich Re; Insurance Information Institute.
Geophysical events(earthquake, tsunami, volcanic activity)
Meteorological events (storm)
Hydrological events(flood, mass movement)
Selection of significant loss events (see table)
Natural catastrophes
Earthquake, tsunami Japan, 11 March
EarthquakeNew Zealand, 22 Feb.
Cyclone Yasi Australia, 2–7 Feb.
Landslides, flash floodsBrazil, 12/16 Jan.
Floods, flash floods Australia, Dec. 2010–Jan. 2011
Severe storms, tornadoesUSA, 22–28 April
Severe storms, tornadoesUSA, 20–27 May
WildfiresUSA, April/Sept.
EarthquakeNew Zealand, 13 June
FloodsUSA, April–May
Climatological events(extreme temperature, drought, wildfire)
Number of Events: 820Number of Events: 820
DroughtUSA, Oct. 2010– ongoing
Hurricane IreneUSA, Caribbean22 Aug.–2 Sept.
WildfiresCanada, 14–22 May
DroughtSomaliaOct. 2010–Sept. 2011
FloodsPakistanAug.–Sept.
FloodsThailandAug.–Nov.
Earthquake Turkey23 Oct.
Flash floods, floodsItaly, France, Spain4–9 Nov.
Floods, landslidesGuatemala, El Salvador11–19 Oct.
Tropical Storm WashiPhilippines, 16–18 Dec.
Winter Storm JoachimFrance, Switzerland, Germany, 15–17 Dec.
27Source: MR NatCatSERVICE
Natural Loss Events, 2011
World Map
Natural Catastrophes Worldwide 2011Insured losses US$ 105bn - Percentage distribution per continent
Continent Insured losses US$ m
America (North and South
America)40,000
Europe 2,000
Africa Minor damages
Asia 45,000
Australia/Oceania 18,000
37%
2%
44%
17%
<1%
28Source: MR NatCatSERVICE
In 2011, 61% of insured natural catastrophe losses
were in the Asia/Pacific region, nearly 3.5 times the
average of 13% over the prior 30 years (1981-2010)
In 2011, just 37% of insured natural
catastrophe losses were in the
Americas, barely half the average of 66%
over the prior 30 years (1981-2010)
28
Natural Catastrophes Worldwide 1980 – 2011 Insured losses US$ 870bn - Percentage distribution per continent
Continent Insured losses US$ m
America (North and South
America)566,000
Europe 146,000
Africa 2,000
Asia 115,000
Australia/Oceania 41,000
66%
16%
<1%
13%
5%
29Source: MR NatCatSERVICE
In 2011, 61% of natural catastrophe losses were
in the Asia/Pacific region, nearly 3.5 times the
average of 13% over the prior 30 years (1981-2010)
29
30
$1
2.3
$1
0.7
$3
.7
$1
4.0
$1
1.3
$6
.0
$3
3.9
$7
.4 $1
5.9
$3
2.9
$7
1.7
$1
0.3
$7
.3
$2
8.5
$1
1.2
$1
4.1
$3
2.3
$1
3.8
$1
3.7
$4
.7
$7
.8
$3
6.9
$8
.6
$2
5.8
$0
$10
$20
$30
$40
$50
$60
$70
$80
89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12*
US Insured Catastrophe Losses
*PCS figure for H1 2012 (stated in 2012 dollars).Note: 2001 figure includes $20.3B for 9/11 losses reported through 12/31/01 ($25.9B 2011 dollars). Includes only business and personal property claims, business interruption and auto claims. Non-prop/BI losses = $12.2B ($15.6B in 2011 dollars.) Sources: Property Claims Service/ISO; Insurance Information Institute.
US CAT Losses in 2011 Were the 5th Highest in US History on An Inflation-Adjusted Basis
H1 2012 CAT losses were down $11.9B or 49% from
$24.4B in H1 2011
Record Tornado Losses Caused
2011 CAT Losses to Surge
($ Billions, 2011 Dollars)
30
31
Top 14 Most Costly Disastersin U.S. History
(Insured Losses, 2011 Dollars, $ Billions)
*Losses will actually be broken down into several “events” as determined by PCS. Includes losses for the period April 1 – June 30.Sources: PCS; Insurance Information Institute inflation adjustments.
$9.0$11.9 $13.1
$19.1$21.3
$24.0 $25.0
$47.6
$8.5$7.7$6.5$5.5$4.4$4.3
$0$5
$10$15$20$25$30$35$40$45$50
Irene(2011)
Jeanne(2004)
Frances(2004)
Rita (2005)
Hugo (1989)
Ivan (2004)
Charley(2004)
Wilma(2005)
Ike (2008)
Northridge(1994)
SpringTornadoes& Storms*
(2011)
9/11Attack(2001)
Andrew(1992)
Katrina(2005)
Taken as a single event, the Spring 2011 tornado and storm season are
is the 4th costliest event in US insurance history
Hurricane Irene became the 11th most expense
hurricane in US history
Nu
mb
er
Geophysical (earthquake, tsunami, volcanic activity)
Climatological (temperature extremes, drought, wildfire)
Meteorological (storm)
Hydrological (flood, mass movement)
Natural Disasters in the United States, 1980 – 2012:H1Number of Events (Annual Totals 1980 – 2011 and First Half 2012)
Source: MR NatCatSERVICE 32
22
6
61
1
50
100
150
200
250
300
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
There were 90 natural disaster events in the first
half of 2012
Losses Due to Natural Disasters in the US, 1980–2011 (Overall & Insured Losses)
33
Overall losses (in 2011 values) Insured losses (in 2011 values)
Source: MR NatCatSERVICE © 2011 Munich Re
(2011 Dollars, $ Billions)
2011
Overall Losses: $72.8 Bill
Insured Losses: $35.9 Bill
2011 was the 5th most expensive year on record for insured
catastrophe losses in the US.
Approximately 50% of the overall cost of
catastrophes in the US was covered by insurance in 2011
(Overall and Insured Losses)
Source: NOAA 34
Global Temperature Anomolies, May 2012
Northern hemisphere land
and ocean temperature for May 2012 was
the all-time warmest on
record, at 0.85 degrees C (1.53
degrees F) above average
35
78.4
2.4 3.77.0
2.9
39.4
81.6
6.3 3.7
16.722.9
69.6
0
10
20
30
40
50
60
70
80
90
Hydropower Geothermal MunicipalWaste
Wood/Biomass Solar Wind
2010 2035
Average annual change
(Gigawatts)
Wind is expected to experience the greatest change in capacity but
solar will experience the fastest growth
+0.2%
+4.0% +0.1%
+3.5 %+8.6 %
+2.3 %
U.S. Renewable Energy Net Summer Capacity & Avg. Ann. Change, by Source, 2010 – 2035P
Source: US Energy Information Administration, Annual Energy Outlook 2012, Appendix A16; Insurance Information Institute.
347.7
472.4508.3
551.5595.7
637.3678.3
462.1
0
100
200
300
400
500
600
700
800
1990 2005 2006 2010P 2015P 2020P 2025P 2030P
World Primary Energy Consumption, 1990-2030P
Source: Energy Information Administration, 2009 International Energy Outlook, Insurance Information Institute.
Between 2006 and 2030, energy consumption in projected to increase
annually by 1.5% worldwide but only 0.5% in the US
Quadrillion BTUs
Global energy consumption is
expected to increase by 33.4% between 2010 and 2030 but by only 12% in
the US
37
World Energy Consumption by Fuel,1990—2035F
Source: US Energy Information Administration, International Energy Outlook 2011; Insurance Information Institute.
Renewables will account for 14% of global energy consumption by
2035, up from 20% in 2008
38
Oil & Gas Extraction Employment,Jan. 2010—August 2012*
*Seasonally adjustedSources: US Bureau of Labor Statistics at http://data.bls.gov; Insurance Information Institute.
156
157
157
158 159
158
158 16
0
160 16
2
161
161 16
3 164 16
7 170 17
1 173 17
5 177 18
0 183
183 18
6 188 19
0 192
193
194 19
5 196 197
150
155
160
165
170
175
180
185
190
195
200
Jan-
10
Feb
-10
Mar
-10
Apr
-10
May
-10
Jun-
10
Jul-1
0
Aug
-10
Sep
-10
Oct
-10
Nov
-10
Dec
-10
Jan-
11
Feb
-11
Mar
-11
Apr
-11
May
-11
Jun-
11
Jul-1
1
Aug
-11
Sep
-11
Oct
-11
Nov
-11
Dec
-11
Jan-
12
2/30
/210
2
Mar
-12
Apr
-12
May
-12
Jun-
12
Jul-1
2
Aug
-12
Oil and gas extraction employment is up 26.3% since Jan. 2010 as the energy sector
booms.
(Thousands)
39
Distribution of Major Shale Deposits: 5.76 Tr. Cu. Ft. in 48 Shale Basins in 32 Countries
Source: US Energy Information Administration; Insurance Information Institute.
Europe and S. America also have large deposits
Initial assessments reveal 5.76 trillion cu. ft. of shale gas
worldwide, including 1.069 trillion cu. Ft. in North America
40
Technological Risks: Vulnerability and Susceptibility Vary Across the Globe Technological Risks
Cyber attacks Massive data fraud/theft Mineral resource supply
vulnerability Massive digital misinformation Unintended consequences of
new life sciences technologies Unintended consequences of
climate change mitigation Unintended consequences of
nanotechnology
Persistent extreme weather
Source: World Economic Forum, Global Risks 2012; Insurance Information Institute.
Technological Risk Landscape
41
Cyber Risk Threat Spectrum:Terrorism is a Concern
Sources: Waterfall Security Solutions.
Combination of cyber
attack with inside access
Highly targeted (low volume)
attacks; Dedicated afford
to do harm
Stuxnet: Autonomous Attack Sabotaging Iranian Uranium Enrichment Facilities Likely created by US and Israeli intelligence services Based on deep insider intelligence, planted deep inside perimeter using USB sticks
Advanced Persistent Threats (APT) = Manual Control Human-powered, but demonstrated ability to penetrate almost any defense
42
Societal Risks: Vulnerability and Susceptibility Vary Across the Globe Societal Risks
Water supply crisis Food shortage crisis Rising religious fanaticism Vulnerability to pandemics Unmanaged migration Mismanagement of
population aging Unsustainable population
growth Backlash against globalization Ineffective drug policies
Source: World Economic Forum, Global Risks 2012; Insurance Information Institute.
Societal Risk Landscape
43
Summary & Conclusions
SO…Is the World Really a Riskier Place?
44
Reasons for Optimism, Causes for Concern in the Insurance Industry No Shortage of Local & Global Threats—Same Throughout Human History and
the “Human Struggle” Will Never End Economic insecurity
Geopolitical instability
Natural and manmade disasters
But by Many Objective Measures Humans Are Much Better Off than at any Time in History Lifespan
Standard of living
Education
But Many of These Advances Are Fragile Many historical examples of societal collapses
Good News: World Will Likely Avoid Falling into Another Global Recession But…It Is Still Unclear if Humans Can Successfully Manage Global Threats in a
Cooperative Manner Interconnectedness through trade, finance, technology, intellectual exchange, natural
resources and climate is unparalleled in human history
www.iii.org
Thank you for your timeand your attention!
Twitter: twitter.com/bob_hartwigDownload at www.iii.org/presentations
Insurance Information Institute Online:
45