Risks, Rewards and Shifting Paradigms

Changes in economic conditions, the environment and technology can affect the frequency and severity of insured losses. With the pace of change accelerating, insurers now must address a continuous stream of emerging issues -- an increasingly important challenge to operational success. A current catalog of emerging issues includes potential upsurges in arson resulting from the mortgage crisis; pandemic risks; more frequent outbreaks of drug-resistant forms of staph in schools, nursing homes and hospitals; identity theft cyber risk; workplace exposure to hazardous chemicals; and the possible unintended consequences of nanotechnology and genetically modified organisms. To guard against the potentially debilitating financial consequences of emerging issues, insurers must monitor a range of economic, environmental, and technological developments.