Disruptive Technology Is Top Emerging Risk Concern: Risk Managers

From the disruptive potential of artificial intelligence to the cascading impacts of climate change, risk managers shared the top concerns that keep them up at night in a recent survey from the Society of Actuaries (SOA) and the Casualty Actuarial Society (CAS).

The 17th Annual Emerging Risk Survey, coupled with results from a mid-year flash survey conducted in May 2024, aims to help risk professionals better anticipate individual threats, analyze how risks could multiply each other’s impacts, and proactively plan for future scenarios.

“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 Emerging Risks

The survey measured how the top concerns of risk managers differed between November 2023 and May 2024. In the November 2023 survey, climate change dominated the responses, followed by war, cyber/networks, disruptive technology, and demographic shifts.

Six months later, the May 2024 flash survey showed a shift in priorities, with disruptive technology moving into the top spot, followed by war, climate change, cyber/networks, and financial volatility. This change in rankings is particularly notable for climate change, which decreased from the No. 1 position among emerging risks in November 2023 to No. 4 in May 2024, per the survey.

The emergence of disruptive technology as the top risk is significant, as it ranked third in 2023 did not appear among the top five concerns of risk managers in 2022, the survey’s authors noted. This shift may be attributed to the launch of ChatGPT in November 2022 and the subsequent media attention and public discussion surrounding the benefits and threats of generative AI, according to the survey.

Current Risk Concerns and Stress Testing Gaps

Aside from emerging risks, the mid-year flash survey also asked risk managers about their current risk concerns and whether they had performed stress tests on those risks.

Political extremes topped the list, with 44% of respondents having stress tested this concern. Data and cyber threats followed closely, with 40% of risk managers performing stress tests. Inflation came in third, with 32% of respondents stress testing this risk.

Generative artificial intelligence, a newcomer to the list, was the fourth most concerning risk, with 30% of risk managers performing stress tests. Economic slowdown or depression rounded out the top five, with 23% of respondents having stress tested this scenario.

Top Risk Combinations to Watch

The survey also delved into the concept of risk combinations, asking respondents to consider both correlated risks and risk clusters. Correlated risks are those that directly impact each other, such as climate change affecting energy costs, according to the survey. On the other hand, risk clusters involve events that may occur in parallel or sequentially but don’t necessarily have a causal relationship, like earthquakes happening during a period of financial volatility.

According to the 2023 survey results, the top five risk combinations identified by respondents were:

1. Climate change and natural disasters
2. Cyber/networks and disruptive technology
3. Asset price shock and financial volatility
4. Climate change and loss of freshwater services
5. Terrorism and wars (including civil wars)

“Trends are as important as absolute responses in helping risk managers contemplate individual risks, threat multipliers and how to plan for future scenarios. The survey responses, especially the comments, give risk managers a way to share innovative ways they think about and deal with risk,” the report’s authors stated.

Access the full survey here. &