Insurance industry joins new WEF-led coalition to tackle innovation risks
Source: Asia Insurance Review | Dec 2017
The insurance industry has joined forces with technology companies and governments in a new initiative led by the World Economic Forum that will work on avoiding catastrophic levels of uninsured risks in the innovation economy.
The Mitigating Risks in the Innovation Economy working group aims to close gaps in existing governance frameworks to manage risks from innovations, determine the liabilities, roles and responsibilities involved with these risks and will also set up a data-sharing mechanism to manage the risks.
The insurers point to potential risk scenarios of emerging risks with vastly varying estimated costs:
- A cyber-attack on the US Northeast electrical grid could result in economic losses as high as US$222 billion.
- A disruption of the cloud could result in economic losses ranging from $15.6 billion to $121.4 billion.
- A compromised software upgrade for globally interconnected systems could put between $4.5 trillion and $15 trillion of global GDP at risk over five years due to losses to global GDP output.
Most of such innovation-related risks are uninsured currently, noted the WEF statement; with insurance gap as high as 83% in a cloud service disruption scenario and 93% for a mass vulnerability setting. Other risks are yet unknown.
Insurance industry participants in the initiative include Allianz, Lloyd’s, Marsh & McLennan, Sompo Holdings, Swiss Re, Willis Towers Watson, XL Catlin and Zurich. Technology companies include Cisco, Hitachi, IBM and Siemens, while senior officials represent European Commission, India, Japan, Netherlands, Singapore, Switzerland, United Kingdom and the United States.
The members of this initiative have committed to further multi-stakeholder actions to be developed and piloted in 2018. They have issued an initial joint report setting out the risks and goals, prepared by the Forum in collaboration with Oliver Wyman, a member of the initiative. A