Is The World Becoming A
IS THE WORLD BECOMING a riskier or safer place? It’s an inter- esting question—and a fundamental one that cuts to the very heart (and future) of the insurance industry, which has some-
thing of a love-hate relationship with risk.
On the one hand, everyone has a vested
interest in mitigating covered risks to the
greatest extent possible. But on the other
hand, a utopian world devoid of all danger
would be not only a dull place—but also
one with very, very low premiums.
We first asked the riskier/safer question—rather rhetorically—in an NU editorial at the start of the summer. But when
responses started coming in, we knew
we had hit on a topic people wanted to
discuss—and around which the responses
were in extreme conflict with each other.
Some thought we were insane for even
implying that the world could be considered
a safer place—“do we live in an air-tight,
bomb-proof bunker with a foolproof fire-
wall?” they wanted to know. Others thought
it equally obvious, in a time of great techno-
logical advances and elongated life spans,
that our existence is a lot less nasty, brutish,
short—and risky—than it used to be.
To get a broader perspective on this
question, we asked more than 30 of the in-
dustry’s top leaders—plus politicians, a fu-
turist and Ken Feinberg—to weigh in with
their considerable expertise and experience.
Plenty of answers fell into the “safer”
camp, with a focus on better building codes,
safer cars, more refined natural-catastrophe
warning systems and more advanced medical care. And risk managers, the optimists
noted, are getting ever-more-sophisticated
tools to help them control loss.
But a definite plurality of experts pegged
our world as one becoming increasingly
risky—and they had a lot of reasons for their
pessimism: Global warming and global supply chains. Terrorism and political instability.
Scarcer resources and all the scary scenarios
that implies. A greater concentration of property in flood- and hurricane-prone coastal
areas. And the ability of the Internet to ruin a
brand’s reputation in a day, an hour, minutes.
Both sides noted the ultimate wild card
in the equation, perhaps the most unpredictable factor of them all: human nature
and our ability to both devise brilliant solutions to seemingly intractable problems—
and to act with the most willful disregard to
the safety of our property and ourselves. NU
CHRIS PEIRCE PRESIDENT, COMMERCIAL MARKETS LIBERTY MUTUAL
It’s a no brainer that the world is getting riskier
with every day that goes by. An ever-growing
global population, combined with ever-scarcer
supplies of food, water and energy, is a powder keg waiting to explode.
Then, there are the unknown risks,
which are maybe the most worrisome.
Asbestos put a lot of insurance companies
out of business—what’s the next asbestos? Genetically modified food? Nanotechnology? We don’t know, but we can be sure
it’s out there.
PRESIDENT AND CEO
INDEPENDENT INSURANCE AGENTS
AND BROKERS OF AMERICA
Cars are safer today than they’ve ever been. Buildings are safer than they’ve ever
been for earthquake and protection from natural disasters. Products are probably safer than
they’ve ever been. So things can be made safer.
But what we can’t control is the weather
CEO | MARSH U.S.
Although the 21st Century is in its infancy,
we have already experienced and borne
witness to formidable new and emerging
risks. Cyber security, global warming and
nuclear weapons in the hands of rogue
states are examples of risks that were
either unknown or under-imagined two generations ago.
At the same time, we also are experiencing the metamorphosis of known risks that
have taken on additional dimensions of inter-
and human nature—and human
judgment and human emotions.
And so from that perspective,
when humans are the ones who
decide whether to have a war,
whether to launch terrorist attacks—things are probably as unsafe as they’ve always been. You look at our
country—are we safer today than we were
in the 1990s? The answer is probably no,
primarily because of the threat of terrorism.
connectedness, volatility and potential severity.
Last year’s oil-platform explosion in the Gulf of
Mexico; the Japanese earthquake, tsunami and
nuclear disaster this past March; and the ongoing global financial crisis, now in its third year,
all serve as examples of the pervasiveness and
global nature of risk today.
But the world also is a safer place with
respect to effective risk management and
disaster preparedness. Many governments, institutions and organizations have learned to
expect the unexpected and to take measures
to reduce their vulnerability to both natural catastrophe and human-element perils.