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Beware the rise of virtual Picassos: Swiss Re scans emerging risks

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Swiss Re has outlined in its annual Sonar report the emerging risk topics it believes the insurance industry and world at large cannot afford to dismiss.

The 10th edition of Sonar – short for Systematic Observation of Notions Associated with Risk – lists crypto assets such as non-fungible tokens for Picasso art works, readiness for future pandemics and raw material shortages as among the 14 challenges looming on the horizon.

Climate change-related impacts such as thawing of permafrost – ground (rock, soil and ice) that remains at or below 0°C for two or more years, typically lying below the layer of ground that freezes and thaws annually – and threat of invasive species if climate change goes wrong are on the risk list too.

The report also flags hurdles in automated underwriting, quantum computing, emergence of new fuels to decarbonise the shipping industry and the commercial space age as areas of threats and opportunities for the insurance industry.

Even as the world is pre-occupied with the Russia-Ukraine conflict and its compounding economic effects, Swiss Re urges the industry and business leaders not to overlook the looming challenges identified in the Sonar report.

“A global pandemic, geopolitical conflicts, surging inflation and an unstoppable climate crisis – these are just some of the many risks that Sonar has examined over the past decade that have ultimately materialised,” Group Chief Risk Officer Patrick Raaflaub said.

“However, researching new risks is not about forecasting. It is about raising awareness of risks that may impact society and preparing ourselves accordingly.”