Is the world becoming a riskier or safer place? It's an interesting question—and a fundamental one that cuts to the very heart (and future) of the insurance industry, which has something of a love-hate relationship with risk.
On the one hand, everyone has a vested interest in mitigating covered risks to the greatest extent possible. But on the other hand, a utopian world devoid of all danger would be not only a dull place—but also one with very, very low premiums.
We first asked the riskier/safer question—rather rhetorically—in an NU editorial at the start of the summer. But when responses started coming in, we knew we had hit on a topic people wanted to discuss—and around which the responses were in extreme conflict with each other.
Some thought we were insane for even implying that the world could be considered a safer place—"do we live in an air-tight, bomb-proof bunker with a foolproof firewall?" they wanted to know. Others thought it equally obvious, in a time of great technological advances and elongated life spans, that our existence is a lot less nasty, brutish, short—and risky—than it used to be.
To get a broader perspective on this question, we asked more than 30 of the industry's top leaders—plus politicians, a futurist and Ken Feinberg—to weigh in with their considerable expertise and experience.
Plenty of answers fell into the "safer" camp, with a focus on better building codes, safer cars, more refined natural-catastrophe warning systems and more advanced medical care. And risk managers, the optimists noted, are getting ever-more-sophisticated tools to help them control loss.
But a definite plurality of experts pegged our world as one becoming increasingly risky—and they had a lot of reasons for their pessimism: Global warming and global supply chains. Terrorism and political instability. Scarcer resources and all the scary scenarios that implies. A greater concentration of property in flood- and hurricane-prone coastal areas. And the ability of the Internet to ruin a brand's reputation in a day, an hour, minutes.
Both sides noted the ultimate wild card in the equation, perhaps the most unpredictable factor of them all: human nature and our ability to both devise brilliant solutions to seemingly intractable problems—and to act with the most willful disregard to the safety of our property and ourselves.
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