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

Verizon’s risk manager David Cammarata loves when his team can make a real impact on the bottom line.
By: | May 2, 2017 • 4 min read

R&I: What was your first job?

I was a financial analyst with the N.J. Casino Control Commission.

R&I: How did you come to work in risk management?

I was told at a Christmas luncheon in 2003 that I was being promoted into a new job.

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

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I think the risk management community is getting a lot better at utilizing big data and analytics to manage risk. Significant improvements have been made, but there is still much more room for improvement.

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

I think that the insurance and brokerage communities need to really start thinking about what this industry is going to look like in 10 years. They need to start addressing how they are going to remain relevant. I think that major disruptions to existing business models will occur and that these disruptions combined with innovation and technological advances may catch many of today’s industry leaders by surprise.

David Cammarata, assistant treasurer, risk management and insurance, Verizon Communications Inc.

R&I: What was the best location and year for the RIMS conference and why?

San Diego, any year.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

I think the advent of cyber risk and cyber insurance. For several years it has been, and it continues to be, the main topic of discussion at industry meetings.

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

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I think the most scary scenarios include a nuclear, biological, chemical or radiological event, a widespread global health epidemic and/or a widespread state sponsored cyber shutdown.

R&I: How much business do you do direct versus going through a broker?

We do almost all of our business through a broker.

R&I: Is the contingent commission controversy overblown?

No. It’s a conflict.

R&I: Are you optimistic about the U.S. economy or pessimistic and why?

Optimistic because hopefully President Trump’s policies (lower taxes and less regulation) will be pro-business and good for the economy.

R&I: Who is your mentor and why?

My dad, who passed away many years ago. He was very influential during the formative years of my career. He taught me how important integrity and reputation were to your brand and he had a very strong work ethic.

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

I would have to say raising two awesome kids. My daughter is graduating from James Madison University this year as co-valedictorian. My son is finishing his sophomore year at Rutgers and has near perfect grades. But more importantly, both of my kids have turned out to be really good people.

R&I: How many emails do you get in a day?

A lot.

“I love it when the risk management organization is able to contribute in a way that makes a real impact to the corporation’s overall objectives. On several occasions we have been able to make real contributions to the bottom line.”

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

“My Cousin Vinny.” That movie makes me laugh no matter how many times I watch it.

R&I: What’s the best restaurant you’ve ever eaten at?

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My dad used to take me to a place called Chick & Nello’s. It was an Italian place that did not have a menu. They came to your table and told you the two or three items they were making that day. The food was out of this world.

R&I: What is your favorite drink?

Iced tea. The non-alcoholic kind.

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

I can think of several places but for me it would be a tie between India and Italy. India just has such a different culture and way of life and Rome has breathtaking historical sites.

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

Well, one of the best thrill rides I’ve been on was Kingda Ka at Great Adventure. It feels risky but probably isn’t all that risky. I flew in a prop plane with my brother-in-law one time … that felt kind of risky. I have also parasailed, does that count? I think it definitely has to be driving on the N.J. Turnpike day in and day out.

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

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What about the Fukushima 50? I don’t think I could have done what they did.

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

I love it when the risk management organization is able to contribute in a way that makes a real impact to the corporation’s overall objectives. On several occasions we have been able to make real contributions to the bottom line.

R&I: What do your friends and family think you do?

I don’t think they really know. My children see me as dad; others just see me as an executive with Verizon.




Katie Siegel is a staff writer at Risk & Insurance®. She can be reached at [email protected]