Focusing on future risks: From data to Action – Understanding and Managing the Risks of Tomorrow

Geopolitical tensions, climate change and technological developments pose enormous challenges for companies. A SEF.Growth-Event of NZZ at the Corporate Centre of Zurich Insurance, not only the risks of the future were discussed, but also ways in which companies can proactively address them. Lukas Frösch, Director Entrepreneurship, NZZ Connect, moderated the event.

The global balance of power is shifting: the conflict between the US and China and the war in Ukraine are creating a new dynamic in international relations. These changes have a significant impact on global supply chains and the stability of partnerships. Juan Beer, CEO of Zurich Insurance, emphasised that companies must adapt to greater volatility and fragility in international relations. Regionalisation, onshoring and increased diversification of supply chains are crucial strategies for increasing resilience to these uncertainties.

Climate change remains a key challenge

Although political crises have dominated the agenda in recent years, climate change remains a key issue for companies and insurers. The increase in natural disasters and extreme weather events is leading to rising economic losses. In 2023, natural disasters caused approximately 280 billion US dollars in damage worldwide, only a portion of which was insured. Companies need to be better prepared for these risks by increasing their prevention and adapting their strategic planning to the new reality.

Technological change as both an opportunity and a risk

Rapid technological development, particularly in the field of artificial intelligence (AI), is opening up new opportunities, but it also entails risks. According to the Global Risk Report of the World Economic Forum, the importance of the technology industry is constantly growing, leading to a global race for technological supremacy. At the same time, technological progress increases the risk of cyber attacks, as evidenced by the recent rise in cybercrime. Insurers such as Zurich Insurance play a key role in protecting companies from such threats and strengthening their digital security.

Demographic change and Europe’s economic future

The ageing of society poses significant economic challenges, particularly for Europe. A decline in the labour force could lead to a slowdown in economic growth if targeted measures are not taken to keep workers in the market. This development is forcing companies to develop new strategies to remain competitive and to use demographic change as an opportunity for innovation and adaptation.

Using risks as a driver for innovation

Despite the gloomy forecasts, change also offers opportunities. Juan Beer emphasised that a proactive approach to risks is the key to shaping the future. This involves the joint development of new data and an intensive exchange between companies in order to better understand and manage risks. A willingness to innovate and the courage to see uncertainties as opportunities are crucial to remaining successful in the long term.

Risk perception and reality

In his lecture, Peter Giger, Group Chief Risk Officer at Zurich Insurance, highlighted the challenges arising from geopolitical risks, climate change and technological developments. He emphasised the importance of risk perception and the need to prepare for an uncertain future.

Giger criticised the often distorted perception of risks. He emphasised that people tend to idealise the past and perceive the present as more uncertain, even though the world has never really been stable. The challenge lies in developing a differentiated view of current and long-term risks and not relying solely on historical data.

Challenges posed by technology

Cyber risks pose new challenges for insurers, particularly because risks can spread quickly worldwide. Giger emphasised that cyber attacks are no different in nature from previous risks – but they do require new management approaches. He is also critical of the discussion about artificial intelligence: he believes it is more of a marketing gimmick than a real threat, as long as you are well prepared.

Long-term risks and resilience

According to Giger, a key problem is that society reacts strongly to short-term threats and in doing so loses sight of long-term challenges, such as demographic change. For the insurance industry, this means focusing on resilience in order to remain capable of acting even in an unpredictable future.

Seeing change as an opportunity

In conclusion, Giger also emphasised that every change, however challenging, also offers opportunities. He called for risks to be actively accepted and for learning from mistakes instead of fearing change. This attitude is crucial to promoting innovation and remaining fit for the future.

Live hack

Gunnar Porada, Founder & CEO innoSec, was the last speaker of the evening. He humorously addressed various aspects of cyber security, the banking world and hacking. He described how he works on websites like crackstation.net, how he deals with security issues and the challenges he encounters when communicating with banks and their IT managers. He emphasised the complexity of security in the digital world and showed that computers only do what they are told, regardless of the moral dimension.

He described scenarios in which security vulnerabilities are discovered and demonstrated and how they are responded to. In a (fake) live hack, he transferred 10 million euros from the CDU’s donation account in Germany to the account of the German Child Protection Agency to build urgently needed kindergartens. He thus underlined the importance of taking security vulnerabilities seriously and fixing them to avoid damage. Porada played with the question of how people behave towards computers and their vulnerabilities. In the end, he also talked about trust in digital certificates and security in dealing with SSL and encryption, which plays an important role in modern IT security.

Proactive risk management as a success factor

In this uncertain and changing world, companies need to be flexible and strategic in the way they operate. Dealing with geopolitical tensions, climate-related challenges and technological risks requires not only adaptability but also a willingness to collaborate and innovate. As the NZZ’s SEF Growth Event shows, where there are risks, new opportunities also arise for those who are willing to take them.

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Read also: Cyber Security Month 24: Interview with John Madelin, one of the world’s most rekognised Cyber Security Experts (part one)