Geneva Association & Chief Risk Officers Forum: Loss of biodiversity seen to impact industry less than other risks
A loss of nature and biodiversity is perceived as less of a risk in terms of its impact to the re/insurance industry than other factors within the next five years, says a new report from The Geneva Association.
The organisation said that it had spoken with twenty-five firms within the industry for the report, titled Nature and the Insurance Industry: Taking Action Towards a Nature-Positive Economy.
Surprisingly, biodiversity loss was assessed as being of only medium risk in its impact on the industry. The riskier factors, according to respondents, in the predicted period were climate change and transition risk, antimicrobial resistance, critical infrastructure blackouts, and emerging infectious diseases. The authors of the report went onto say that nature-based risks and opportunities remain primarily a scientific and environmental issue for most companies.
Over the next five-to-ten years, respondents to the report said that the physical risk of climate change, monetary policies, supply chain complexity, geopolitical conflicts, and cyber risks were considered high risk of impact to the industry. New risks in 2022, said The Geneva Association, were cited as climate engineering (including carbon capture storage) and space risk in lower Earth orbit.
The Geneva Association’s Nature and the Insurance Industry report, in reporting on emerging risks to the sector, used the work of The CRO Forum, which released its Emerging Risks Initiative report in August.
That report defined space risk in lower Earth orbit as being the perils that come with a surfeit of technology orbiting the planet.
It said: “The current expansion in the deployment of satellite mega-constellations […] by commercial space companies such as Space X and OneWeb has the potential to significantly increase the number of objects in orbit around the Earth. Such new infrastructure is adding to existing space debris that has been accumulating from old space missions, such as rocket-debris and non-operational satellites, of which only a tiny proportion is large enough to be tracked. There are numerous risks to be aware of in this rapidly changing environment with potential impacts for re/insurers. The most obvious is that the risk of damage to operational systems due to collisions (with space debris, other operational systems, or meteorites) is vastly increased as their numbers increase.”
The CRO Forum also wrote that there are wider risks relating to the potential for cyber-attacks on connected satellite constellations impacting critical infrastructure on Earth, geopolitical tensions created as a small number of companies and countries dominate this critical and finite resource, and environmental impacts on Earth resulting from the greater number of rocket launches needed to develop mega-constellations. Issues also arise, said the CRO Forum, around decommissioning satellites and the fallout from space debris falling back to Earth.
There are estimated to be more than 100million pieces of space debris large enough to cause real damage to the people and technology operating in the Earth’s orbit.
Ideas around space and risk have been swimming around the industry in recent weeks. At the beginning of October, Lloyd’s said it would collaborate with the UK Government and industry experts on the development of the Earth & Space Sustainability Initiative kitemark.
The Earth & Space Sustainability Initiative will bring together industry, academia, government stakeholders and international bodies to ensure that space continues to support the environmental, economic and scientific interests of future generations, noted Joanne Wheeler, director at Alden Legal and chair of the Satellite Finance Network, at the time.
Source: Reinsurance News, https://www.reinsurancene.ws/loss-of-biodiversity-seen-to-impact-industry-less-than-other-risks-geneva-association/