Geopolitical power centres have shifted since the financial crisis, driven by five macro-trends, including rising populism and the decline of the US’ role as a conflict mediator, according to Lloyd’s.
The findings are contained in a substantive new report on emerging geopolitical risks produced by Lloyd’s in association with the University of Cambridge’s Centre for Risk Studies.
Shifting powers: meeting the challenges of the geopolitical landscape, explores the transformation of the geopolitical risk landscape over the last decade and focuses on the ten most pressing risks these themes present today, which range from cyber-attacks, social unrest and the migration crisis.
The research also provides a strategic perspective on these systemic risks, while analysing their probability and impact.
Lloyd’s said it aims to use this research to support businesses with the resources and knowledge required to help protect their organisations, proposing a series of steps for businesses to consider, such as assessing supply chain exposure and taking precautions to safeguard IP and trade secrets against major cyber-attacks.
The report details the existing insurance solutions available to help businesses stay resilient during periods of crises and uncertainty, and identifies opportunities where the insurance industry can help develop new solutions to address these risks.
It also highlights the innovative work already underway from Lloyd’s Lab start-ups, such as Moonshot and Verisk Maplecroft, who harness artificial intelligence and new sources of data to better understand geopolitical threats. The research also highlights the critical role that insurance can play in helping developing economies mitigate geopolitical risk, in environments where insurance penetration is low, but the political risk landscape is volatile.
Through the Lloyd’s Lab, Futureset, and the Product Innovation Facility, Lloyd’s said it will continue to bring the industry together to help communities and businesses build resilience against geopolitical risk.
Bruce Carnegie Brown, chairman of Lloyd’s, said: “The geopolitical landscape is more complex, intricate and interconnected than ever before. Lloyd’s has a unique role as a hub of risk expertise and innovation, and we are delighted to have partnered with the University of Cambridge’s Centre for Risk Studies to identify ways we can help businesses manage these geopolitical challenges. Lloyd’s, and the wider insurance industry, can play a central role in addressing geopolitical risk, and in doing so create a safer, more sustainable world.”
Andrew Coburn, chief scientist at the University of Cambridge’s Centre for Risk Studies, added: “The changing nature of geopolitics poses a significant challenge to an industry traditionally associated with protecting physical assets. Insurers must innovate to safeguard the dependencies and complex operational practices which underpin global commerce from a host of geopolitical risks as they intersect with technology, public opinion, climate change, and other factors. We are delighted to contribute to this thought leadership promoting ambitious and necessary changes within the industry which will help to safeguard us all.”
Lloyd’s emerging risk report, “Shifting powers: meeting the challenges of the geopolitical landscape”, can be accessed here.