Digital technology’s clash with legacy infrastructure and the spread of 5G mobile networks are among emerging risks identified by Swiss Re Institute in its latest insurance risk report.
The annual SONAR report identified risks to the insurance and asset management sectors to help firms prepare for new scenarios and adapt their behavior and products.
Emerging risks were classed as ‘slow burner’ risks which were newly-developed and difficult to quantify but potentially could have a significant impact on society.
The five emerging risks identified for 2019 were: digital technologies meeting existing infrastructure, the spread of 5G technology, limits to central bank actions, the growth of genetic testing and the effect of climate change on public health.
Swiss Re said digital technology and genetic testing were the risks most likely to have a ‘high’ impact within the next three years while the other three risks were expected to have a gradual impact of longer than three years.
It particularly flagged climate change and its impact on human health caused by heatwaves, floods, droughts and fires. This could subsequently lead to soaring mortality rates and healthcare costs with consequences to health, workers’ compensation and life insurance lines of business.
Patrick Raaflaub, Swiss Re’s group chief risk officer, said: “Swiss Re and the insurance industry first flagged climate change as an emerging risk many decades ago. The risk has now ‘emerged’ but associated and challenging uncertainties still remain, such as the implication on life and health insurance.”