Insurers are increasingly going to be held responsible for mitigating the threat of systemic risks, says Jon Guy
By Jon Guy
The eyes of the world will turn to Dubai next week as world leaders gather for the United Nation’s Conference of the Parties 28 (COP28) climate summit.
It is of little surprise that insurers have been keen to set part of the agenda, given the likely role the industry will be asked to play in any future climate solutions.
Tokio Marine Group and Economist Impact have launched a new study into the most prominent risks faced by global cities – and the results do not make good reading for governments across the globe.
The Resilient Cities Index 2023 examined 25 global cities’ ability to evade, withstand and recover from a spectrum of shocks and long-term stresses.
The report warned: “In a world hurtling toward a future where over two-thirds of the global population will reside in cities by 2050, urban areas stand as humanity’s frontline against the unpredictable challenges of the 21st century.”
It added that cities across the world lacked the infrastructure and robust environmental policies needed to combat the worsening impacts of climate change.
London is viewed as one of the most resilient cities in the world, but the report notes it is disproportionately exposed to flood and cyber security risks.
Tokio Marine warned that London was exposed to a range of risks that, through technological advancements or the effects of climate change, may become more pronounced.
Riverine flood risk is cited as a major threat, with London’s lack of cyber security and AI preparedness also a growing concern.
Brad Irick, executive officer of Tokio Marine Group and chief executive of Tokio Marine Kiln, said: “Our research shows that London is clearly on the right path to resilience, but more is to be done if the UK’s capital is able to adapt to the demands that rapidly changing cyber security and artificial intelligence developments bring.
”Insurance can and should facilitate innovation. It has a responsibility to support the technological leaps forward that will be essential to mitigate the greatest challenges which society faces.”
In a nutshell, it is becoming increasingly clear that insurers are recognising they will be called on to play a significant role in facilitating not only resilience, but also adaptation to future systemic risks.
Governments will want to emerge from COP28 with a string of major initiatives and agreements, all of which will be dependent on the buy-in of business.
Those agreements will come with potential costs and exposures that will require public and private sector solutions.
Insurers often say “where there is challenge, there is opportunity”. Given the scale of the challenges, the opportunities must be immense.