Emerging risks

Re/insurers operate in a rapidly changing and increasingly complex risk landscape. Demographic, economic, technological, socio-political, regulatory or environmental trends may change existing risks or create new ones. In addition, growing interdependencies between these developments can lead to accumulations of risk and create significant knock-on effects. People’s risk perceptions are shifting, liability and regulatory regimes continue to evolve and stakeholder expectations are growing.

This complex landscape provides fertile ground for “emerging risks” – newly developing or changing risks that are not yet entirely understood and managed. Such risks are difficult to quantify, and their potential impact on society and the re/insurance industry is not yet sufficiently accounted for.

Detecting and investigating such risks early on forms an important part of our comprehensive approach to risk management. In analysing how risks are evolving and related to each other, we seek to assess their potential impact on Swiss Re. This is vital to reduce uncertainty and prevent unforeseen losses, raising awareness within the Group and across our industry.

Our SONAR framework

SONAR (“systematic observation of notions associated with risk”) is our Group-wide framework specifically designed to manage and communicate emerging risks. Firmly embedded in the Group’s risk management organisation, SONAR allows us to identify, assess and report these risks in a timely manner and to factor them into our strategic business decisions.

The SONAR process involves several integrated layers. The first is an interactive intranet platform which enables our employees to share and discuss risk notions based on trends and developments in the re/insurance landscape. This enables bottom-up identification and peer reviews.

Our emerging risk specialists periodically cluster and further assess these risk notions for their potential impact on our business. Further “early signals” are harvested from external research institutions and experts, and digitally enabled horizon scanning tools are also deployed. Finally, our specialists carry out in-depth investigations and internal reviews on selected topics.

You can learn more about one of these topics – mental health – in the case study. To share some of our key insights on these emerging risks with external audiences, we published the eighth edition of our comprehensive SONAR report in 2020 (see box below). Under SONAR 2020 report you can also find information on two special features included in the SONAR 2020 report, which focus on emerging risks associated with the journey towards net-zero emissions.

Swiss Re SONAR: New emerging risk insights

Swiss Re’s SONAR report features emerging risk themes that have the potential to impact the re/insurance industry. These topics derive from our SONAR process and have been assessed by our emerging risk management experts in recent years.

SONAR 2020: New emerging risk insights

Swiss Re SONAR report cover (photo)

Strategic foresight

Identifying and addressing emerging risks can be challenging. Their novelty and interconnectedness make it difficult to determine when a particular risk notion must be considered an emerging risk. Timing is of crucial importance. If measures to price and, eventually, exclude a particular risk are taken too early, we may not be able to offer our clients adequate re/insurance protection; if measures are taken too late, we may end up with increased loss potential.

Emerging risks: strategic initiatives

Given these challenges, we believe it is essential to foster risk dialogue with various partners. By sharing perceptions and assessments, all parties can gain a better understanding of potential emerging risks.

Further information on emerging risks

In addition to the SONAR 2020 report and this publication, you can find further information on selected emerging risks in our Financial Report 2020 and on our website:

Financial Report 2020:

Significant long-term emerging risks we consider to be particularly important for Swiss Re’s business:

  • Cyber risks – Edge computing
  • Climate change – Moving to a low-carbon future
  • Prolonged large-scale power blackout

Emerging risks particularly important for our business

swissre.com: Top emerging risks and trends

Links to four articles on top emerging risks and trends identified in the SONAR 2020 report:

  • Special feature: Moving to a low-carbon future
  • Special feature: Locking it up – carbon removal and insurance
  • Computing at the edge – cybersecurity overstretched?
  • Tipping the scale? – Intergenerational imbalances on the rise

SONAR 2020: New emerging risk insights