Adapting to the changing risk landscape

The insurance industry in 2024 is facing an array of challenges that demand strategic adaptation and resilience.

FAnews spoke to Spiros Fatouros, Chief Executive Officer, Marsh McLennan Africa & South Africa about the emerging risks and how to navigate this complex interconnected risk terrain.

A clear pattern has emerged

“In our Global Risks Report, more than 1,400 business, government, and academic leaders were surveyed. Drawing from this global and local expertise, the risk landscape for 2024 is growing in complexity,” cautioned Fatouros. 

A clear pattern has emerged, according to Fatouros, where challenges spanning extreme weather, technological misinformation, societal polarisation, cost of living crises, and cybersecurity emerge as the most significant challenges to navigate in both the near and longer term.

What we should anticipate

In 2024, the Global Risks Report shows that we can anticipate:

• Increased AI-generated misinformation and disinformation pose the biggest risk over the next two-year period. Around the world, more than 2 billion voters in 50 countries will head to the polls, all alongside the continued rise of domestic propaganda and censorship. Technology-generated misinformation and disinformation, along with the proliferation of new technologies, pose a significant threat, challenging society, politics, and media to distinguish truth from misinformation.
• The growing divide between the global South and North, emphasises economic disparities, standards of living, and the potential impact of AI-driven polarisation.
• Extreme weather events and the potential for record-breaking heat conditions, drought, wildfires, and flooding.
• The cost-of-living crisis, which stems from supply-side pricing pressures, escalation of conflicts worldwide, and the potential consequences of prolonged high inflation for smaller businesses and nations.
• Cybersecurity and the persistent threat of cyber-attacks remain a significant concern, highlighting the need for robust protective measures.

Innovative solutions to develop long-term resilience

“As business leaders look to navigate this complex interconnected risk terrain, our industry together with the public and private sectors have an opportunity to proactively engage and collaborate to drive innovative solutions to develop long-term resilience to these challenges,” he said.

Some of these, according to Fatouros, include:

• Localised strategies - increasing a community's preparedness to bear the effects of inevitable global risks; censorship and surveillance, ecosystem collapse, and inflationary risks.
• Breakthrough endeavours - research and development generally; for infectious diseases, frontier technologies, extreme weather, and cyber security.
• Collective actions - aggregated individualised effort; addressing labour shortages, unemployment, supply chain, and economic recessions.
• Cross-border coordination - international cooperation, including geoeconomic confrontation, armed conflict, and critical change to climate systems.

“The evolving landscape of risks demands a forward-thinking approach from both insurers and their intermediaries. Brokers and advisers, as trusted partners, should embrace innovation, stay informed about emerging risks, and collaborate closely with insurers to provide effective solutions. In this era of uncertainty, the ability to adapt and proactively address challenges will be a key differentiator for success in the insurance industry,” concluded Fatouros. 

Writer’s Thoughts

In a world of evolving risks and uncertainties, it's clear that adaptability and innovation are crucial for the insurance industry's success. As we navigate through the challenges of 2024 and beyond, collaboration between insurers, intermediaries, and other stakeholders will be essential in developing resilient solutions. Do you agree? Please comment below, interact with us on Twitter at @fanews_online or email me - myra@fanews.co.za