There is an increasing relevance of geopolitical risks overall, recognising the inherent imbalance of a polarised world.
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Especially since the outbreak of the Russia-Ukraine war in 2022, the global geopolitical landscape is undergoing dramatic changes. Another main source of conflict are the increasing disputes between China and the United States of America. The increasing tensions are having a massive impact on all sectors of the economy.
The shifting of the political landscape is considered to be one of the major risks that the (re)insurance industry has to deal with. Looking at other emerging risks, it is striking that there are a lot of interconnectivities between these risks and the threats resulting from shifting political landscapes. The main ones to mention here are:
By themselves, the mentioned emerging risks can be regarded as accumulation risks or even systemic risks.
The consequences for the (re)insurance industry are manifold:
More than ever, it is essential to proactively address a wide range of extreme scenarios and systemic risks and to pursue the question of how the (re)insurance industry intends to counter them. Careful analyses and strategic risk management decisions must be made to protect companies from the next "black swan" event, as well as from scenarios that have previously been considered rather theoretical.