Top connected risks trends in 2018 - Russell Group
Source: Asia Insurance Review | Mar 2018
The relationship between public capital and private capital, macroeconomic risks and protectionism and data privacy are among the key connected risks trends that corporates need to be aware of in 2018, says a white paper from risk management and services software company Russell Group.
Connected risk refers to the growth in companies increasingly integrating across industrial sectors and geographies, and creating greater levels of risk. This exposes corporates and (re)insurers to a broader range of inter-related perils, which requires a risk management approach built upon deep business intelligence and analytics.
Russell Group highlighted a number of emerging exposures, which it says have slipped under the radar of many risk managers and (re)insurance underwriters. A summary of these unusual but frighteningly powerful risk drivers is as follows:
- Public capital, Private Capital Disconnect: Private Capital has shot up whilst at the same time public debt has increased sharply, rendering Governments powerless.
- The $74 Trillion Global Economy Disruption: Currently, World GDP stands at $74 trillion according to the World Bank. Wealth that can be disrupted by external shocks such as Nat CAT disasters. The macroeconomic risk and opportunity will need to be monitored carefully by risk managers across the corporate spectrum.
- The World is Not Global, It’s Local: Succeeding in any market in today’s global economy will require an adjustment of a company’s product, channel and marketing strategies.
- General Data Protection Regulation (GDPR) Geopolitical Tension: With GDPR going live on the 18th May, a less discussed angle is the geopolitical ramifications of GDPR. For under GDPR, the EU can levy heavy fines on all companies including US companies, which could trigger a heavy response from the US Administration.
- The New Digital Protectionism: Protectionism in the Connected World is radically different as it incorporates not just free trade but areas such as data, environmental and geopolitical hazards.
- The Future of Social Media Risk: Social Media is becoming a powerful tool in making or breaking a company’s reputation. The question facing risk managers, CEOs and marketing departments is: How can we protect, consolidate or change our business model in such an environment?
- Uncompetitive Business Strategies: Most businesses leaders are using strategies that do not fit with the way the real world works. In short, the strategy is stuck – or frozen.
- Growth of Risk Culture: Boards are taking more of an interest in their company’s internal risk management systems. Yet, before implementing any new risk management programmes, boards need to ask themselves, what is risk culture? A