Emerging risks – the risks and opportunities of tomorrow

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Emerging Risks - the risks and opportunities of tomorrow - Munich Re

Emerging Risks - the risks and opportunities of tomorrow

Critical infrastructures, demographic change and harmful substances in the environment – three topic areas from very different environments, but all with one thing in common: they harbour risks that are still difficult to assess. Risks that can have a serious impact on society, politics and business. "Emerging risks“ is the name given to such new and changing risks by the insurance industry.

Emerging risks include trends, or events that happen suddenly, and are characterised by a high degree of uncertainty in terms of their occurrence probability, the loss amount that can be expected from them, and their potential impact. They are frequently long-tail risks with a medium- to long-term period for loss settlement. The best-known example from the past is asbestos. In most cases, the nature and range of impact from such risks is difficult to quantify – part of the reason being that cases of the particular kind have never happened before, or only very rarely.

But this is what makes the field of emerging risks so fascinating: investigating them produces findings that are useful for refining existing risk management tools, and also provide vital stimulus for the design of new business ideas.

At Munich Re, over a dozen different emerging risks are constantly monitored. A Groupwide emerging risk management system has been developed for the purpose.

Our role internally and externally
The role of emerging risk management is to identify new and changing risks at an early stage, analyse them thoroughly, deduce the risk potential for Munich Re itself, and also for business, society, politics or the environment, and then adopt measures to control and minimise the risks themselves. To this end, we engage in regular exchanges within the worldwide Group structure, and compare our findings with clients, the industry, NGOs and research institutes.

Through this exchange, we contribute to creating the necessary level of risk awareness in society and the political arena, and promote the professional handling of emerging risks.

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