Actuarial Organizations Provide Insights on Emerging Risks
Report
ARLINGTON, Va. and CHICAGO, July 18,
2024 /PRNewswire/ -- The Casualty Actuarial Society
(CAS) and the Society of Actuaries (SOA) jointly published a full
report of findings from the 17th Annual Emerging Risk
Survey along with results from a supplemental mid-year flash
survey. The online questionnaires ask risk managers to rank current
and emerging risks, and researchers track those rankings over time.
Disruptive technology, climate change, war and cyber risks were
some of the key emerging risks.
Top Emerging Risks
Top emerging risks chosen by risk managers in both surveys
reflect recent events: deadly heatwaves and other climate events,
continuing conflicts in Ukraine
and the Middle East, as well as
the advent of ChatGPT. Survey data collected in November 2023 has been supplemented with a
May 2024 flash survey. In the
November 2023 survey, climate change
in particular held a dominant place in risk managers' responses. It
ranked first both as an emerging risk and as part of combination
risks.
Responses between the two time periods have changed somewhat.
For example, climate change as a top emerging risk decreased from
number one in November 2023 to number
four in May 2024, while disruptive
technology has moved into the top spot. Some of this fluctuation
may be the result of recency bias. The fall hurricane season may
have impacted responses to the November
2023 survey, and continued development of generative
artificial intelligence might be reflected in the responses to the
mid-year flash survey.
For a more complete picture, the five emerging risks cited the
most by surveyed risk managers include:
November 2023
Survey
|
May 2024 Flash
Survey
|
Climate
change
|
Disruptive
Technology
|
War
|
Cyber/Networks
|
Disruptive
technology
|
War
|
Demographic
shift
|
Climate
Change
|
Cyber/Networks
|
Financial
Volatility
|
The biggest change from the previous emerging risk surveys is
the inclusion of disruptive technology. It didn't appear in the top
five in 2022 but was ranked number 1 by May
2024. ChatGPT launched in November
2022, just as the 16th Annual Emerging Risk
Survey was closing. Since then, generative AI has received a lot of
media attention, and there has been much public discussion about
its benefits and threats.
"Identifying trends helps risk managers anticipate individual
risks, analyze threat multipliers and plan for future scenarios,"
said report author, Max Rudolph,
FSA, CFA, MAAA, CERA. "The survey responses, especially the
comments, provide a vehicle for risk managers to share innovative
ways to analyze and manage risk."
Top Current Concerns and Stress Testing
The 2024 mid-year flash survey included questions about current
scenarios that most worried risk managers and about which risks
they had stress tested. The table below ranks the scenarios giving
respondents the most concern and the percentage that said those
concerns had been stress tested:
Rank
|
Risk
|
Concern
|
Stress Test
Performed
|
1
|
Political
extremes
|
44 %
|
4 %
|
2
|
Data/cyber
threats
|
40 %
|
17 %
|
3
|
Inflation
|
32 %
|
59 %
|
4
|
Generative
artificial intelligence
|
30 %
|
3 %
|
5
|
Economic
slowdown/depression
|
23 %
|
30 %
|
The results exposed some imbalances. For example, stress testing
exceeded stated concern for pandemics and liquidity risks. However,
stress testing for other concerns fell short, such as for political
extremes, data/cyber threats and Generative AI.
Top Risk Combinations
The 17th Annual Survey conducted in November 2023 asked respondents about risk
combinations, including risks that correlate with each other (for
example, climate change impacting energy costs) and risk clusters,
which do not necessarily correlate but happen in parallel or
sequentially (such as earthquakes during a time of financial
volatility). Respondents selected the following top five risk
combinations:
- Climate change and natural disasters: severe
weather
- Cyber/networks and disruptive
technology
- Asset price shock and financial
volatility
- Climate change and loss of freshwater
services
- Terrorism and wars (including civil wars)
Survey Details
Sponsored by the CAS and SOA, the 17th Annual
Emerging Risk Survey was conducted by Max
J. Rudolph of Rudolph Financial Consulting LLC. The online
survey included 133 participants. Eighty-one percent of respondents
were based in North America, and
additional responses came from risk managers in Europe, South
America, Asia, Africa, the Middle
East, and the Caribbean/Bermuda. The May
2024 flash survey was conducted online and included 164
participants.
Read the full survey report and the mid-year flash survey
report for more findings and details, including an appendix
with questions and comments from the risk manager respondents.
About the Casualty Actuarial Society
The Casualty Actuarial Society (CAS) is a leading
international organization for credentialing, professional
education and research. Founded in 1914, the CAS is the world's
only actuarial organization focused exclusively on
property-casualty risks and serves over 10,000 members worldwide.
CAS members are sought after globally for their insights and
ability to apply analytics to solve insurance and risk management
problems. Visit www.casact.org.
About the Society of Actuaries
With roots dating back to 1889, the Society of Actuaries (SOA)
is the world's largest actuarial professional organization with
more than 32,000 actuaries as members. Through research and
education, the SOA's mission is to advance actuarial knowledge and
enhance the ability of actuaries to provide expert advice and
relevant solutions for financial, business and societal challenges.
Visit www.soa.org.
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SOURCE Society of Actuaries