Looking ahead

Looking back on the remarkable market turbulence we saw in 2008, I’m reminded of the words of Oscar Wilde: "to expect the unexpected shows a thoroughly modern intellect."
 
One thing that we can be sure of is that this coming year we’ll once again need to expect the unexpected if we are to successfully navigate the changing risk environment. 
 
While we don’t yet know what the coming year will bring, we look forward to working with you to meet the challenges ahead. 

360 risk project: the year ahead

Late last year we asked 360 risk project audiences about the topics we covered in 2008.

We received suggestions on new angles on climate change, terrorism and political risk, and corporate liability, and we'll expand the range of emerging risk topics which we discuss this year.

Risk project calendar 2009

We’ve recently teamed up with the International Institute for Strategic Studies (IISS), “the world’s leading authority on political-military conflict” established in 1958, to forecast how climate change and security may merge to become a future ‘mega-risk’. In the first quarter of the year, we’ll set out what this means for business.

This summer we’ll publish the results of comprehensive research with global business leaders which will show the regional variations in risk management priorities and preparedness. 

This coming autumn we'll analyse how the recession may be impacting levels of risk for organisations and their executive boards.

Year in review

In 2008, it became increasingly clear to us how closely linked the risk environment and the changing economic climate are.

Increase in litigation expected

When we partnered with the Economist Intelligence Unit in May 2008 to examine chief executives' views on liability risk, we found not only that they were bracing themselves for an increase in litigation as a result of the credit crunch, but also that fears are exacerbated by widespread concern that compensation culture—or perhaps more accurately a fear of one—threatens to stifle innovation.

Changing legal environment

Meanwhile, working with the RAND corporation in November 2008, we found that the legal environment itself is changing fast, and business needs to become more familiar with the trends which could change their risk profile in the future.

Three particularly spring to mind: the funding of litigation by third party organisations searching for new investment opportunities in a difficult economic climate; the expected arrival of class actions in Europe; and greater shopping around by plaintiffs for the legal forum which will bear the ‘best’ results.

The struggle against home-grown terrorism

Tackling the subject of home-grown terrorism, the 360 risk project concluded in February 2008 that society faces a generation-long struggle to combat extremism both at home and in less stable developing regions. 

Of course, in difficult economic times and with unemployment rising, the need to tackle the risks of radicalisation for vulnerable young people at home and abroad only becomes more urgent.

The good news is that there are many new ways in which business can play its part.

Climate change must remain a priority

Finally, despite the current focus on the economy, it’s our belief at Lloyd’s that dropping the ball on climate change now would be a serious mistake—not just for the environment but also for any organisation that strives for competitive advantage and good risk management practice.

Working with Risk Management Solutions (RMS) in September 2008, we focused on the subject of coastal flooding.

We found that, left unchallenged, insured losses for high risk property could double by the 2030 decade. However, by taking effective adaptation measures now, we could actually reduce future risk to below current day levels.

Darragh Gray
360 risk project