2017 Most Dangerous Emerging Risks

2017 Most Dangerous Emerging Risks

We focus on the risk mitigation and coverage challenges of climate change, economic nationalism, cyber business interruption and artificial intelligence.
By: | April 7, 2017 • 4 min read

Every year since 2011, Risk & Insurance® editors and writers have set about determining the Most Dangerous Emerging Risks for a package that runs in our April issue. As we’ve monitored which risks have the potential to cause the most damage, one thing is becoming apparent: Most Dangerous Emerging Risks seem to be emerging at a faster and faster rate.

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Just last year, we wrote about the risk that a populace that self-selects information sources, relying mostly on unsubstantiated sources on the internet, could come to erroneous conclusions, with dangerous consequences.

We called that story “Fragmented Voice of Authority.”

Fearful proof of that premise came to life in December when a gunman shot up a pizza parlor in Washington, D.C., after reading bogus information on the internet that former Secretary of State Hillary Clinton was running a child sex ring there.  Fortunately, no one was injured in that incident.

Now it looks like fake news stories emanating from Russia could have played an interfering role in our Presidential election.

Another focus of last year’s issue was our crumbling infrastructure. That topic received terrifying confirmation when heavy rainfalls pushed California’s aged Oroville Dam to the bursting point. Should the dam break, billions in real estate losses as well as potential loss of life would result.

That April 2016 story, titled “Crumbling Infrastructure: Day of Reckoning,” warned that we now face the consequences for too long foregoing spending on important infrastructure upgrades.

We’ve seen that Most Dangerous Emerging Risks can take years to develop and emerge. But in both of these cases, they emerged in a matter of months.

The process of determining the Most Dangerous Emerging Risks begins in January, when we start placing calls to insurance carriers, risk modelers and brokers.

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We ask executives with those companies to engage us in an off-the-record conversation about which risks concern them the most. A defining characteristic of a Most Dangerous Emerging Risk is that it has the potential to cause widespread losses, but might not be on the radar of many risk managers.

Once we pick the brains of industry executives, we compile a list of the risks that look like they could qualify as Most Dangerous Emerging Risks. The editors then meet to determine which of those risks we should focus on for the April issue. It’s at that stage that we go back to our original sources, and if we picked one of their stories, ask them for an on-the-record interview on the topic.

This year, after distilling our conversations with our sources, we came up with five emerging risks that could cause massive losses for commercial insureds and carriers.

The risk that sea rise could wreck coastal real estate values is one. Economic nationalism, both domestically and globally, are two and three.

The layered risk presented by the use of artificial intelligence in manufacturing and other processes is our fourth most dangerous emerging risk this year, and the threat that hackers could take down the internet and cause massive cyber business interruption is number five.

Experts say that trillions in property values could literally be underwater due to sea rise in the next mortgage cycle, or the next 30 years, according to a story by editor-in-chief Dan Reynolds.

Hopes are that public and private sector stakeholders can pull together to devote the thought and the resources necessary to create the infrastructure necessary to protect our ports, our office buildings and our homes from sea rise.

China is doing it and we should too.

The risk that many find most concerning is the fear that a hack could take down the internet.  Business interruption for that kind of event would be so widespread that insurers just can’t cover it.

Check out managing editor Anne Freedman’s story on that risk.

Protectionism is on the rise in this country. Politicians that want to firm up our borders represent a threat to supply chains and the free flow of commerce.

The U.S. tech industry, in particular, fears a talent shortage should the new administration’s efforts to limit immigration become law. Associate editor Katie Siegel’s piece details that risk and others that stem from domestic protectionism.

The fear for multinational companies, according to a story by staff writer Juliann Walsh, is that global business uncertainty will increase unduly; prompted by events such as Britain’s vote to leave the European Union and Venezuela’s decision to close its borders with Brazil.

Associate editor Michelle Kerr’s piece looks at the tangle of liability questions created by artificial intelligence.

Our award-winning Most Dangerous Emerging Risks coverage is, of course, intended not to scare people but to advance the thought leadership and dialogue we need to mitigate risk and ensure a more resilient, sustainable economy.

On that point, we can all agree. &

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2017 Most Dangerous Emerging Risks

Artificial Intelligence Ties Liability in Knots

The same technologies that drive business forward are upending the nature of loss exposures and presenting new coverage challenges.

 

 

Cyber Business Interruption

Attacks on internet infrastructure begin, leaving unknown risks for insureds and insurers alike.

 

 

U.S. Economic Nationalism

Nationalistic policies aim to boost American wealth and prosperity, but they may do long-term economic damage.

 

 

Foreign Economic Nationalism

Economic nationalism is upsetting the risk management landscape by presenting challenges in once stable environments.

 

 

Coastal Mortgage Value Collapse

As climate change drives rising seas, so arises the risk that buyers will become leery of taking on mortgages along our coasts.  Trillions in mortgage values are at stake unless the public and the private sector move quickly.

The R&I Editorial Team may be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

Pinnacle Entertainment’s VP of enterprise risk management says he’s inspired by Disney’s approach to risk management.
By: | November 1, 2017 • 4 min read

R&I: What was your first job?

Bus boy at a fine dining restaurant.

R&I: How did you come to work in this industry?

I sent a résumé to Harrah’s Entertainment on a whim. It took over 30 hours of interviewing to get that job, but it was well worth it.

R&I: If the world has a modern hero, who is it and why?

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The Chinese citizen (never positively identified) who stood in front of a column of tanks in Tiananmen Square on June 5, 1989. That kind of courage is undeniable, and that image is unforgettable. I hope we can all be that passionate about something at least once in our lives.

R&I: What emerging commercial risk most concerns you?

Cyber risk, but more narrowly, cyber-extortion. I think state sponsored bad actors are getting more and more sophisticated, and the risk is that they find a way to control entire systems.

R&I: What is the riskiest activity you ever engaged in?

Training and breaking horses. When I was in high school, I worked on a lot of farms. I did everything from building fences to putting up hay. It was during this time that I found I had a knack for horses. They would tolerate me getting real close, so it was natural I started working more and more with them.

Eventually, I was putting a saddle on a few and before I knew it I was in that saddle riding a horse that had never been ridden before.

I admit I had some nervous moments, but I was never thrown off. It taught me that developing genuine trust early is very important and is needed by all involved. Nothing of any real value happens without it.

R&I: What about this work do you find the most fulfilling or rewarding?

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Setting very aggressive goals and then meeting and exceeding those goals with a team. Sharing team victories is the ultimate reward.

R&I: What is the most unusual/interesting place you have ever visited?

Disney World. The sheer size of the place is awe inspiring. And everything works like a finely tuned clock.

There is a reason that hospitality companies send their people there to be trained on guest service. Disney World does it better than anyone else.

As a hospitality executive, I always learn something new whenever I am there.

James Cunningham, vice president, enterprise risk management, Pinnacle Entertainment, Inc.

The risks that Disney World faces are very similar to mine — on a much larger scale. They are complex and across the board. From liability for the millions of people they host as their guests each year, to the physical location of the park, to their vendor partnerships; their approach to risk management has been and continues to be innovative and a model that I learn from and I think there are lessons there for everybody.

R&I: What is the risk management community doing right?

We are doing a much better job of getting involved in a meaningful way in our daily operations and demonstrating genuine value to our organizations.

R&I: What could the risk management community be doing a better job of?

Educating and promoting the career with young people.

R&I: What have you accomplished that you are proudest of?

Being able to tell the Pinnacle story. It’s a great one and it wasn’t being told. I believe that the insurance markets now understand who we are and what we stand for.

R&I: Who is your mentor and why?

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John Matthews, who is now retired, formerly with Aon and Caesar’s Palace. John is an exceptional leader who demonstrated the value of putting a top-shelf team together and then letting them do their best work. I model my management style after him.

R&I: What is your favorite book or movie?

I read mostly biographies and autobiographies. I like to read how successful people became successful by overcoming their own obstacles. Jay Leno, Jack Welch, Bill Harrah, etc. I also enjoyed the book and movie “Money Ball.”

R&I: What is your favorite drink?

Ice water when it’s hot, coffee when it’s cold, and an adult beverage when it’s called for.

R&I: What does your family think you do?

In my family, I’m the “Safety Geek.”

R&I:  What’s your favorite restaurant?

Vegas is a world-class restaurant town. No matter what you are hungry for, you can find it here. I have a few favorites that are my “go-to’s,” depending on the mood and who I am with.

If you’re in town, you should try to have at least one meal off the strip. For that, I would suggest you get reservations (you’ll need them) at Herbs and Rye. It’s a great little restaurant that is always lively. The food is tremendous, and the service is always on point. They make hand-crafted cocktails that are amazing.

My favorite Mexican restaurant is Lindo Michoacan. There are three in town, and I prefer the one in Henderson as it has the best view of the valley. For seafood, you can never go wrong with Joe’s in Caesar’s Palace.




Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]