The 3 Top Risks For 2021 and Beyond, According to AXA XL
Risk managers didn’t think there could be a bigger curveball than 2020.
A global pandemic, a massive hurricane season and geopolitical unrest combined forces to make 2020 a year to remember as we faced both new risks and ones that have grown familiar over the last few years.
But a new year brings new risks. Though not as dramatic as 2020, 2021 has seen it’s own challenges. AXA XL’s 2021 Future Risk Report highlights the top three risk areas experts and the general population were watching this year.
The report summarizes survey responses from two groups — 3,500 risk experts and 20,000 members of the global public — with a focus on culling responses from younger generations and people under 25.
1) Respondents Ranked Climate Change as the Top Risk
The big headline from the report is that climate change is back on top as the number one risk after being briefly displaced by pandemics in 2020.
Climate risks are of the utmost priority for people under 25, who not only ranked global climate change as their top concern, but also included other environmental issues, like biodiversity and pollution among their top five concerns.
Climate ranks as number one amongst experts’ worries, but it remains unclear whether the world will be able to mitigate the climate crisis. An unstable geopolitical landscape is limiting world leaders’ ability to take meaningful action in the fight against climate change.
One need not look further than the stalled talks around fossil fuels and emissions cuts at the United Nation’s COP26 conference to find evidence of the challenges the public sector faces in setting and achieving the aggressive goals needed to prevent irreversible damage to our environment.
2) Cybersecurity Fears Loom
Digital risks have accelerated since the pandemic — a trend that hasn’t escaped experts’ notice.
AXA XL’s survey ranked cyber risks as the second most pressing issue facing our world today.
In 2020, 51% of experts selected cyber risks amongst their top five. That number jumped 10 percentage points to 61% in 2021.
An increased focus on cyber risks isn’t surprising. Between 2019 and 2020 North America saw a 158% increase in ransomware attacks. Cyber loss ratios jumped for insurers as well from 44.8% in 2019 to 67.8% in 2020, Risk Placement Services reported.
Within the cyber risk category there is a split, however. Younger respondents are more likely to be concerned about data privacy than hackers, the report found, compared to older respondents.
3) You Can’t Forget COVID’s Effects
Though the pandemic finally seems to be retreating as vaccination is underway in much of the world, COVID-19 hasn’t been forgotten.
Concerns over the virus’s lingering effects, especially with regard to long-COVID and the number of people worldwide who face chronic illnesses, were enough to keep pandemics and infectious diseases firmly in the top three risks highlighted by the survey.
Public health may continue to remain prevalent over the next few years as we learn to live with the COVID-19 virus, but AXA XL still found reason for optimism. Namely, that three quarters of people surveyed trust scientists and public health experts to help us navigate through a future crisis.
Other Risks to Watch
In addition to these three risk areas, AXA XL named seven other risks that are top of mind for risk experts and the general population. They are:
- Geopolitical instability
- Social discontent and local conflicts
- Natural resources and biodiversity risks
- New security threats and terrorism
- Financial stability risks
- Macroeconomic risks
- Artificial intelligence and big data risks
One trend the report highlighted is the increase in concerns over digital risks. Ethical concerns surrounding the use of technology moved from the bottom half of the rankings in 2020 to the top half in 2021. Additionally, fears over tech-related economic risks — like cryptocurrencies — rose eight places compared to the 2020 rankings.
Though some tech-related risks ticked up on the list, others moved down. AXA XL found that there is less concern over futuristic technologies like quantum computing and autonomous vehicles than there was in 2020. &