The world is becoming a riskier place. Over the last year, we’ve seen
a spike in the number and severity of natural disasters throughout
the United States and around the world. Weather patterns in general
seem to be more extreme. With more people living and working in
coastal areas, on flood plains and on fault lines, their exposure to loss
continues to rise.
Human risk is also growing. Workplaces are much safer than they
were 50 years ago, but employers are seeing an increase in workers’ compensation claims. Cyber-risk is a large and growing threat to
businesses and individuals, and tort costs continue to rise. Acts of
terrorism, both domestic and international, remain of major concern. But the bottom line
is, we’re in the business of helping clients manage their cost of risk, and these threats
just mean that our clients need our help and services more than ever.
NEAL R. ATON
PRESIDENT AND CEO | WELLS FARGO INSURANCE SERVICES
While the nature of risk changes over time (centuries ago it was plague, gen- erations ago it was world war, and today it is terrorism and cyber-crime), we humans seem to take more risks and accept more exposure as we learn
better how to identify and mitigate them.
Economic progress, technological and medical advances, widespread education
and pursuit of democracy make life safer. But complexity and growing resource
dependence introduce new forms of risk and exposure. Dangers may not be as obvious as those recognized by our early descendants peering from their cave shelters.
So is the world riskier or safer today? It is just different. Risks and consequences
today are perceived and managed differently. As a colleague of mine shared, his
parents fled to bomb shelters, took car rides without seat belts and worried little
about the content of air or water. While experiences of past generations may seem
unthinkable today, he asks, “Will society look back in 50 years disbelieving that
we held cell phones to our heads or accessed financial data through the internet?”
CHAIR & CEO | VALIDUS HOLDINGS
There are individual U.S. states that are
in roughly the same financial position as
Greece and Ireland. This creates an incredible risk factor. And the U.S.
debt problem, if not properly dealt with, will have
a significant impact on
the global economy. The
United States has driven
the world economy since
1946, and while China is
a growing economy, the
world economy will struggle
mightily to replace the U.S. as a
driver of economic growth. That’s
a risk factor to our business and to the standard of living around the world.
heels of the financial crisis, the level of
regulation all over the world has increased
many-fold. You have multiple jurisdictions
competing, sometimes with different standards, sometimes with broad ambiguity in the standards. You
really have to think very
carefully about where you
do business, where you
have capital in your
business, because juris-dictional issues matter
greatly. It’s hard to invest in a business when
you have such regulatory
uncertainty. That actually is a
significant risk to the extent that
it has a chilling effect on business.
Noonan is the former CEO American
Our world, despite the incessant chatter about globalization, is still a very large, diverse and complicated place.
Much of the developing world remains at risk of famine,
malnutrition, disease, extreme poverty and genocidal war.
Sadly, there is little that risk managers and insurers can do
to alleviate these problems.
The countries that make up the developed world,
on the other hand, have eradicated or reduced many
illnesses and diseases that posed grave risks to public
health and well-being just a couple of generations ago.
For those of us fortunate enough to live and work in the
developed world, it is undoubtedly safer and less risky
than in the past.
Insurance is an extremely important feature of the
developed world, and since risk measurement and risk
management are getting better all the time, insurance
has made important contributions to making this a safer
world. As an example, our ability to manage risks caused
by natural disasters has vastly improved in the last few decades. We have a better understanding of these risks and
are much better able to prepare for and mitigate them.