Continuing the momentum of the London discussion in early October, both Lloyd’s and NATO reconvened in New York yesterday to host another event on risk management and the threats and potential solutions to some of the biggest risks facing business and society.
At the Lloyd’s 360 live debate “Managing Risk in the 21st Century,” leading experts discussed piracy, cyber security and climate change for an audience of more than 200 insurance executives, risk managers and business leaders.
Unprecedented Collaboration
The joint Lloyd’s and NATO conference would not have happened 20 or even 10 years ago, however today forming new coalitions is an essential part of risk management,” Lloyd's CEO, Richard Ward commented. “In the modern era, we are able to form new alliances to fight our common threats.”
Events like the one co-hosted by Lloyd’s and NATO in New York provided an opportunity for a call to action.
“We need to speed up our response,” said Ward. “This calls for a combination of visionary policies, thinking the unthinkable and pragmatism- finding ways to mitigate and adjust to a new reality.”
While collaborative action is necessary, Ward stressed the importance of U.S. involvement to help solve these challenges. He noted, “You remain the world’s only super power, you’re critical to any solution and you’re also vulnerable to the failure to find the solutions.”
Strengthening Alliances
While a partnership between the world’s leading specialist insurance market and an intergovernmental military alliance may seem an unusual pairing, just such alliances are precisely what is needed to face the new scope of challenges.
“Threats changed from a cold war scenario with a well defined enemy, to a wide spectrum of risks, threats and potential strategic surprises,” said Admiral Luciano Zappatta, Deputy Supreme Allied Commander Transformation for NATO, “during the past decades NATO has extended incrementally its interests outside the traditional area of responsibility.”
Working outside these areas will involve new levels of collaboration.
“We will increasingly need to work in partnerships, leverage relationships with other international organizations to improve the transparency of information and decision-making,” said Zappata, “a comprehensive, interagency approach, developed in concert with other international organizations like the EU and UN, is fundamental to the security of a diverse Alliance.”
Piracy Risk
To discuss these three major issues of climate change, cyber risk and piracy facing businesses in the 21st Century, the conference featured a panel on each issue, all of which were moderated by Diane Brady, senior editor and content chief of BusinessWeek. The first panel examined the enduring threat of piracy.
Dennis Bryant, a renowned expert on maritime issues shared many of the logistical
and causal issues surrounding piracy while Neil Smith, Head of Underwriting for Lloyd's Market Association discussed the challenges around pricing this threat from an insurer's perspective.
Vice Admiral Maurizio Gemignani of NATO shared a new approach being deployed to combat the threat of piracy.
“This is called ‘Capacity Building’. Assisting the regional States to build their own capacity to combat piracy is of great importance in the long run. It is a long process. And it can only be done as a concerted effort of all the actors in the area. It starts with getting to know each other. A typical example for Capacity Building is the provision of training to local authorities”
Cybersecurity and terrorism
Mike Leibowitz of New York University and Richard Boscovich of Microsoft shared the numerous ways that businesses can be exposed to cybersecurity threats and ways in which they can be easily mitigated or prevented all together.
During the Q&A session, when asked by an attendee what types of cyber terrorism concern companies like Microsoft the most, Boscovich pointed out that anything that compromises Microsoft’s systems is taken with equal seriousness; the attack might have a different target or desired effect, but it is treated the same way.”
Sandy Coddling of Marsh added to the discussion by clarifying how coverage for cyber security has been categorized and changed and some of the criteria companies should consider when thinking about getting such coverage.
Climate – an opportunity and a threat
Pen Hadow, polar explorer and leader of the recent Catlin Arctic Survey, shared the scientific observations from the survey, namely the dramatic reduction in the Arctic sea ice. He suggested that sea ice could cease to be an all-year-round feature within as little as a decade, which will have huge impacts on our environment, such as altering global weather systems and rising sea levels.
Beyond the environmental impact, Professor Lawson Brigham of the University of Alaska at Fairbanks offered numerous insights into the changing economic dynamics resulting from the reduced ice cap in particular the potential opportunities and threats that would present themselves from the extraction of natural resources, new shipping routes and tourism.
Andrew Logan of Ceres, spoke about the various risks and opportunities related to climate change and its potential impact on the insurance industry.
