A recent survey conducted by Ernst & Young and Oxford Analytica shows that Climate Risk is the biggest concern among insurance industry analysts. According to the Ernst & Young description, the research report sought the views of more than 70 analysts from around the world. They came from over 20 disciplines that shape the business environment, including: law, finance, the sciences, business strategy, geopolitics, regulation, medicine, economics, and demographics. They were drawn from 12 of the world’s most important sectors: asset management, automotive, banking and capital markets, biotechnology, consumer products, insurance, media and entertainment, oil and gas, pharmaceuticals, real estate, telecommunications, and utilities. Interviews were open ended and no predetermined list of risks was used. Each analyst was asked for his or her own evaluation of the most important strategic challenges facing global businesses.
The top ten risks are:
1. Climate change: long-term, far-reaching and with significant impact on the industry.
2. Demographic shifts in core markets: offers business opportunities but risk that other sectors will capitalize first.
3. Catastrophic events: rising costs and serious impact on earnings for insurers.
4. Emerging markets: risk and opportunity but competitive threat from new players.
5. Regulatory intervention: increased scrutiny impacting on operations and practices.
6. Channel distribution: technology is changing the way insurance is sold and purchased.
7. Integration of technology with operations and strategy: an enabler to keep pace with competition but lack of integration is a threat at the strategic business level.
8. Securities markets: changes in capital providers and the way capital is entering the insurance industry are causing major changes in the industry.
9. Legal risk: significant and unexpected change in the legal environment, such as government legislation or evolving case law, will continue to have a critical impact on the insurance industry.
10. Geopolitical or macroeconomic shocks: likely causes unknown but consequences potentially severe.