In case you're not getting out much these days, one show that hasn't been cancelled is climate change. Temperatures continue to inch up, glaciers go on melting, vineyards are flourishing in southern Britain**, and cat covers become incrementally more complex and expensive. The good folks at Swiss Re just issued a media release with a catchy title: "Socio-economic developments and climate-change effects to drive rising losses from severe weather events, sigma says."
One quote from the new report should get your attention: "Once again [last year], extreme weather events were the main loss drivers, and growing catastrophe severity will drive larger losses in the future." The reassuring news is that climate/weather risks so far remain insurable, but, as we note below in a slightly different context, loss modeling is undergoing major rethinking. Weather and risks (where buildings are sited, how supply chains are routed, etc.) are both changing. The authors point out how Tokyo's heroic flood mitigation efforts of a generation ago, were largely inadequate when Typhoon Hagibis hammered Japan last year. Of course, the 2019 summary does not factor in COVID-19 impacts on risk distributions.
The summary concludes: "Economic and insured losses resulting from such events [weather catastrophes] will rise in the coming decades, and this presents a major threat to global resilience." COVID's getting the headlines right now, but it's only one kind of natural disaster. Lucky us - in risk management we get to deal with all of them.
*"Meanwhile, back at the ranch" was frequently used by the announcer as a scene transition in the old radio drama, The Lone Ranger. Yeah, I know - what's a radio drama?
**After some 600 years, fine wines are again being grown and made in southern Britain. This is one of the less catastrophic effects of climate change as well as a powerful index of how weather is shifting.
Quick Take 1:
Did You Miss RIMS This Year?
This year RIMS went the way of the whole conference/convention industry - pffftttt! Your feet and lower back may not have felt left out, of course, but let's think about what this may mean for fresh fields of risk. If your company regularly exhibits or is otherwise involved with the conference scene in your industry, you may want to get ahead of new developments in virtual conferencing. Several articles have cropped up recently touting how to do virtual conferencing and we've included one here as a possible primer for this complex topic.
Obviously, a virtual conference eliminates some conventional types of risk. No one's exhibit set up and materials ever went missing en route to a website*. On the other hand, what new cyber type risks might you be incurring for the first time? What about reputational risks if your tech misfires in some spectacular fashion - in front of your whole industry? For example, the article cited says, quite correctly, "Do something out of the box which will make your client/attendees thrilled to be at home and attending the event!" Does that exclamation point give you a shiver thinking about Marketing getting out of their box on a high tech, nationwide platform?
No need to belabor the point. Virtual conferencing is one more area of risk that is changing the new normal. This is one more potential gap in your cyber security perimeter. Help your marketing folks make the right impact. Vet the event app or event networking platform and how it interacts with your corporate IT with such things as product demos and demo data bases.
*Of course, they may go to the wrong website, so, yes, there' still a risk.
Quick Take 2:
About That Outpatient Surgery...
COVID-19 appears to be one of those moments which later historians will refer to as an "inflection point." That's a time when a great many easy, normal assumptions about life get knocked into a cocked hat*. Our friends at ITL have assembled a neat summary of what COVID appears to mean to the actuarial assumptions we all live by in risk management.
The article begins with this pithy assessment which we'll quote in full since it is hard to improve upon:
Our actuarial projections from last year, based on looking at historical data and adjusting it to fit future conditions, are woefully inadequate for the task of projecting what life will be like in an age of "social distancing," pandemic-level illnesses and deaths, widespread closures and cancellations, stock market panic and massive unemployment.
The article goes on to look at each major aspect of most enterprise risk plans as well as personal lines. Obviously, any analysis at this stage, when COVID is still at best partially understood and remedial measures are still half guess and half hope, is very high level, but this summary may help you organize your thoughts around where are we now and where do we go next.
Will actuarial science ever be the same? Well, just remember that famous line from the movies: "There's no crying in actuarial science."
*Oh, yes, about cocked hats. That's thought to be a reference to the old game of ninepins, an early form of bowling. When the remaining pins looked like the corners of a tri-corn hat, a winning bowl was all but impossible.
Say It Isn't So...
It has come to this. The good folks at Advisen recently presented a webinar entitled: Ransomware-as-a-Service: An Evolving Business Model. Yup, ransomware is now a big-time industry with multi-tiered development and marketing models. The "clients" who rent new ransomware as service apps (SaaS, don'tcha know?) from the developers have quotas to meet. If they don't steal enough money in a month to make their quota share, their license for the software is revoked. Think about that.
Oh - also - these guys already work from home. COVID doesn't shut them down.
Words to Remember
From "After the Storm" by Siddhartha Mukherjee, MD. The author, a doctor, is speaking of our medical delivery systems and the many gaps and defects that COVID has exposed. Could this apply as well to risk management?
Everyone now asks: When will things get back to normal? But, as a physician and researcher, I fear that the resumption of normality would signal a failure to learn. We need to think not about resumption, but about revision.