2016 Most Dangerous Emerging Risks

The Fractured Future

Is our world coming apart at the seams?
By: | April 4, 2016 • 5 min read

Clipped genetic codes and broken bridges; fragmented communication; electricity networks so vulnerable to interference it’s a wonder we still have the lights on.

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As we developed our list of Most Dangerous Emerging Risks for 2016, images of fissures and fractures surfaced again and again.

In this issue, we examine four emerging, dangerous risks. We define a Most Dangerous Emerging Risk as a risk with the potential to cause widespread losses, but for which insurance coverage may be in a nascent stage of development.

On one front, we look at our tendency to self-curate media sources to the degree that informed, official statements get overlooked. Look no further than the phenomenon of parents bypassing vaccinations for their children, fed by an erroneous correlation between inoculation and autism.

We all fear terror attacks. We all worry about cyber hacks. Combine the two and you get the possibility that a cyber attack on our grid could cascade into widespread business interruption and public
disarray for months on end.

On another front, we pronounce a day of reckoning due to a shortfall in both the political will and the resources to maintain our country’s infrastructure. The thousands of children exposed to lead in Flint’s drinking water and the 90,000 metric tons of methane released from a gas well in Porter Ranch, Calif., provide foreboding data points.

Another emerging concern is our new ability to cut and paste DNA strands, and the potential that gene-edited products could hit store shelves before the risk is adequately measured.

We all fear terror attacks. We all worry about cyber hacks.

Combine the two and you get a dangerous emerging risk, the possibility that a cyber attack on our grid could cascade into widespread business interruption and public disarray for months on end.

We spoke to a number of industry experts to create the 2016 Most Dangerous Emerging Risks list; carriers, brokers and vendors were consulted.

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The spirit of this exercise is to foster a dialogue in the risk management community about what insurance products might be useful and what risk mitigation strategies companies should be considering right now.

As the years unfold, we see companies and public entities reacting to emerging risks and taking steps to mitigate them. What follows is a list of some risks we’ve written about in the past and measures being taken to mitigate those risks. &

Mitigating Dangerous Emerging Risks

Since 2011, Risk & Insurance® identified and reported on the Most Dangerous Emerging Risks. Here is a look at how some of those risks are now being addressed.

2011: Social Media Threats

hackEmployee and customer posts to Facebook, Twitter and other social media harm corporate reputations. Companies invested in analytical and monitoring tools and created crisis management plans to respond to critical or brand-damaging posts. Some companies fought back using legal means. One car dealership in Massachusetts obtained a $700,000 attachment on the real estate holdings and bank accounts of individuals who posted defamatory statements about the company online.

2011: Rising Sea Levels

floodClimate change is resulting in rising sea levels and increased inland flood risk. Local governments are responding to climate change by analyzing specific threats and taking action. In Boston and New York, wastewater treatment plants will be constructed nearly two feet higher than the plants they are replacing. In the San Francisco Bay area, the region is considering a limit on development near the water and the construction of levees and sea walls to keep the sea from encroaching.

2012: Typhoons

typhoonThe semiconductor industry face supply chain risks because many of its crucial suppliers in the straits of Taiwan are vulnerable to Pacific storms. More companies established relationships with alternative suppliers not located in the same geographic areas or countries. Korea, China and Japan have all become manufacturing locations competing with Taiwan. In addition, some companies are considering reshoring operations to the United States.

2012: Agroterrorism

cowsWe wrote about the potential for terrorists to introduce disease into the U.S. cattle population, decimating ranchers and food suppliers. Food production plants have installed security padlocks and fencing, while milk producers and transporters have security on trucks that will let the company know if the product has been accessed. In 2013, the Food and Drug Administration upgraded its Food Defense Mitigation Strategies Database to provide food processors and distributors with a tool to protect food against intentional contamination. The tool provides a range of preventive measures companies can take to better protect their facilities, personnel and products.

2012: The Pharma-Water Syndrome

waterHormonal and developmental imbalances in juveniles are a sign that drinking water is adulterated with discarded medications. Some municipalities are testing fish and water samples to determine the amount of chemicals in the water. Many local governments created drug take-back programs that allow residents to drop off unused medications, and the Environmental Protection Agency issued guidelines to discourage hospitals and nursing homes from flushing unused drugs down drains or toilets.

2013/2015: Concussions

brainIn 2013, the potential liability resulting from concussions spread from the National Football League to all professional contact sports. In 2015, the exposure reaches athletes of all ages, from college down to community sports leagues. Ivy League coaches are eliminating tackling at practices to prevent concussions while some high school districts have eliminated football from their sports schedules.

Forty-nine states and the District of Columbia enacted strong youth sports concussion safety laws.

2014: Drone Hacking

dronesDevastation could occur if terrorists hacked drones and aimed them at airplanes or other targets. Police in the Netherlands joined forces with Guard From Above to use trained eagles to snatch rogue drones in mid-air. European aerospace conglomerate Airbus uses a combination of radars, infrared cameras and direction finders to identify possible rogue drones. A UK start-up called Open Works Engineering launched an anti-drone net bazooka that can capture a rogue drone in a net and deliver it intact via a combination of a compressed-gas-powered smart launcher and an intelligent programmable projectile.

BlackBar

2016’s Most Dangerous Emerging Risks

01b_cover_story_crackCrumbling Infrastructure: Day of Reckoning Our health and economy are increasingly exposed to a long-documented but ignored risk.

01c_cover_story_leadCyber Grid Attack: A Cascading Impact The aggregated impact of a cyber attack on the U.S. power grid causes huge economic losses and upheaval.

01d_cover_story_vaccineFragmented Voice of Authority: Experts Can Speak but Who’s Listening? Myopic decision-making fostered by self-selected information sources results in societal and economic harm.

01e_cover_story_dnaGene Editing: The Devil’s in the DNA Biotechnology breakthroughs can provide great benefits to society, but the risks can’t be ignored.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

Wawa’s Director of Risk Management knows that harnessing data and analytics will be key to surviving the rapid pace of change that heralds new risk exposures.
By: | July 27, 2017 • 5 min read

R&I: What was your first job?

My first job was at the age of 15 as a cashier at a bakery. My first professional job was at Amtrak in the finance department. I worked there while I was in college.

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

A position opened up in risk management at Wawa and I saw it as an opportunity to broaden my skills and have the ability to work across many departments at Wawa to better learn about the business.

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

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The advancements in analytics are a success for the industry and offer opportunities for the future. I also find value in the industry focus on emerging and specialty risks. There is more alignment with experts in different industries related to emerging and specialty risks to provide support and services to the insurance industry. As a result, the insurance industry can now look at risk mitigation more holistically and not just related to traditional risk transfer.

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

Developing the talent to grow with the industry in specialization and analytics, but to also carry on the personal connections and relationship building that is a large part of this industry.

Nancy Wilson, director, quality assurance, risk management and safety, Wawa Inc.

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

I have had successes at all of the RIMS events I have attended. It is a great opportunity to spend time with our broker, carriers and other colleagues.

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

I think the biggest challenge facing most companies today is related to brand or reputational risk. With the ever-changing landscape of technology, globalization and social media, the risk exposure to an organization’s brand or reputation continues to grow.

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

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The changing consumer demands and new entrants into an industry are concerning. This is not necessarily something new but the frequency and speed to which it happens today does seem to be different. I think that is only going to continue. Companies need to be prepared to evolve with the times, and for me that means new risk exposures that we need to be prepared to mitigate.

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

I try to be optimistic about most things. I think the economy ebbs and flows for many reasons and it is important to always keep an eye out for signs of change.

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

I am fortunate to have opportunities professionally that make me proud, but I have to answer this one personally. I have two children ages 12 and 9 and I am so proud of the people that they are today. They both are hardworking, fun and kind. Nothing gives me a better feeling than seeing them be successful. I look forward to more of that.

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

This is really hard as there are too many favorites. I do prefer books to movies, especially if there is a movie based on a book. I find the movie is never as good. I have multiple books going at once and usually bounce back and forth between fiction and non-fiction.

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

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I have eaten at a lot of different restaurants in many major cities but I would have to pick Horn O’ Plenty in Bedford, PA. It is a farm to table restaurant in the middle of the state. The food is always fresh and tastes amazing and they make me feel like I am at home when I am there. My family and I eat there often during our trips out that way.

R&I: What is your favorite drink?

I do love a good cup of coffee (working at Wawa helps that). I also enjoy a good glass of wine (red preferably) on occasion.

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

Vacations aside, I do get an opportunity to travel for work and visit our food suppliers. The opportunities I have had to visit back to the farm level have been a very interesting learning experience. If it wasn’t for my role, I would have never been able to experience that.

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

My husband, kids and I recently did a boot-camp-type obstacle course up in the trees 24 feet in the air. Although I had a harness and helmet on, I really put my fear of heights to the test. At the end of the two hours, I did get the hang of it but am not sure I would do it again.

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

The first people that come to mind are those who are serving our country and willing to sacrifice their own lives for our freedom.

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

Every day is different and I have the opportunity to be involved in a lot of different work across the company.

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

My husband and children have a pretty good sense of what I do, but the rest of my family has no idea. They just know I work for Wawa and sometimes travel.




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