Emerging Risk Survey Reveals Risk Managers’ Top Concerns
Actuarial Organizations Provide Insights on Emerging Risks Report
July 18, 2024, Arlington, VA and Chicago, IL—The Society of Actuaries (SOA) and the Casualty Actuarial Society (CAS) jointly published a full report of findings from the 17th Annual Emerging Risk Survey along with results from a supplemental mid-year flash survey. The online questionnaires ask risk managers to rank current and emerging risks, and researchers track those rankings over time. Disruptive technology, climate change, war and cyber risks were some of the key emerging risks.
Top Emerging Risks
Top emerging risks chosen by risk managers in both surveys reflect recent events: deadly heatwaves and other climate events, continuing conflicts in Ukraine and the Middle East, as well as the advent of ChatGPT. Survey data collected in November 2023 has been supplemented with a May 2024 flash survey. In the November 2023 survey, climate change in particular held a dominant place in risk managers’ responses. It ranked first both as an emerging risk and as part of combination risks.
Responses between the two time periods have changed somewhat. For example, climate change as a top emerging risk decreased from number one in November 2023 to number four in May 2024, while disruptive technology has moved into the top spot. Some of this fluctuation may be the result of recency bias. The fall hurricane season may have impacted responses to the November 2023 survey, and continued development of generative artificial intelligence might be reflected in the responses to the mid-year flash survey.
For a more complete picture, the five emerging risks cited the most by surveyed risk managers include:
|
November 2023 Survey |
May 2024 Flash Survey |
|
Climate change |
Disruptive Technology |
|
War |
Cyber/Networks |
|
Disruptive technology |
War |
|
Demographic shift |
Climate Change |
|
Cyber/Networks |
Financial Volatility |
The biggest change from the previous emerging risk surveys is the inclusion of disruptive technology. It didn’t appear in the top five in 2022 but was ranked number 1 by May 2024. ChatGPT launched in November 2022, just as the 16th Annual Emerging Risk Survey was closing. Since then, generative AI has received a lot of media attention, and there has been much public discussion about its benefits and threats.
“Identifying trends helps risk managers anticipate individual risks, analyze threat multipliers and plan for future scenarios,” said report author, Max Rudolph, FSA, CFA, MAAA, CERA. “The survey responses, especially the comments, provide a vehicle for risk managers to share innovative ways to analyze and manage risk.”
Top Current Concerns and Stress Testing
The 2024 mid-year flash survey included questions about current scenarios that most worried risk managers and about which risks they had stress tested. The table below ranks the scenarios giving respondents the most concern and the percentage that said those concerns had been stress tested:
|
Rank |
Risk |
Concern |
Stress Test Performed |
|
1 |
Political extremes |
44% |
4% |
|
2 |
Data/cyber threats |
40% |
17% |
|
3 |
Inflation |
32% |
59% |
|
4 |
Generative artificial intelligence |
30% |
3% |
|
5 |
Economic slowdown/depression |
23% |
30% |
The results exposed some imbalances. For example, stress testing exceeded stated concern for pandemics and liquidity risks. However, stress testing for other concerns fell short, such as for political extremes, data/cyber threats and Generative AI.
Top Risk Combinations
The 17th Annual Survey conducted in November 2023 asked respondents about risk combinations, including risks that correlate with each other (for example, climate change impacting energy costs) and risk clusters, which do not necessarily correlate but happen in parallel or sequentially (such as earthquakes during a time of financial volatility). Respondents selected the following top five risk combinations:
- Climate change and natural disasters: severe weather
- Cyber/networks and disruptive technology
- Asset price shock and financial volatility
- Climate change and loss of freshwater services
- Terrorism and wars (including civil wars)
Survey Details
Sponsored by the CAS and SOA, the 17th Annual Emerging Risk Survey was conducted by Max J. Rudolph of Rudolph Financial Consulting LLC. The online survey included 133 participants. Eighty-one percent of respondents were based in North America, and additional responses came from risk managers in Europe, South America, Asia, Africa, the Middle East, and the Caribbean/Bermuda. The May 2024 flash survey was conducted online and included 164 participants.
Read the full survey report and the mid-year flash survey report for more findings and details, including an appendix with questions and comments from the risk manager respondents.
About the Casualty Actuarial Society
The Casualty Actuarial Society (CAS) is a leading international organization for credentialing, professional education and research. Founded in 1914, the CAS is the world’s only actuarial organization focused exclusively on property-casualty risks and serves over 10,000 members worldwide. CAS members are sought after globally for their insights and ability to apply analytics to solve insurance and risk management problems. Visit www.casact.org.
About the Society of Actuaries
With roots dating back to 1889, the Society of Actuaries (SOA) is the world's largest actuarial professional organization with more than 32,000 actuaries as members. Through research and education, the SOA's mission is to advance actuarial knowledge and enhance the ability of actuaries to provide expert advice and relevant solutions for financial, business and societal challenges. Visit www.soa.org.