Agenda-Setting Foresight

The COVID-19 pandemic has laid bare the world’s fault lines, above all social divides, the lack of fairness and the absence of global cooperation. Thierry Malleret explores how diverse activist groups, from a new generation of green campaigners to employees demanding higher standards in corporate life and beyond, to interventionist investors, may overwhelm the forces that favour returning to the status quo.

We recently published Insurance Futures, a series of essays exploring the possible futures of the insurance landscape to 2035, commissioned by Milliman.

On our risk horizon was the near certainty that a pandemic would emerge. The uncertainty was timing.

The original essays shared a common narrative about a world of fragile, tightly coupled systems and growing risks of extreme events. The pandemic has created a ‘hyper-turbulent’ environment characterised by both runaway change and the inability of many global, national and corporate leaders to adapt. Put simply, it has accelerated many of the developments we explored. It has given new urgency to action on climate change. Cultural transformations that might have taken decades are happening in weeks. We are seeing radical economic development and exponential rates of invention.

The COVID-19 pandemic has demonstrated the destructive impact that ‘wild card’ events may have. Pandemics were well-known ‘high impact’ risks categorised as ’near certain’ in risk registers.

Governments and companies around the world have learned a harsh lesson: wild card events should be constantly monitored for the first signs of emergence. Early action is critical.

Peter Kingsley revisits another equally important category in strategic risk management: weak signals—a key to thinking about the future.

Weak signals are ambiguous, barely defined stories that are easily dismissed, yet are a missing link in how to navigate a world of growing complexity, radical uncertainty and above all, speed.

The world’s most profound problems are often the result of short-term thinking, probabilistic worldviews, consensus culture and lack of imagination. Like wild cards, weak signals are ignored at our peril.

There should be few surprises.

Pandemics are ‘wild card’ events—’high impact and certain’. It is not a question of ‘if’, but ‘when’ they occur. They have been on our radar for years. COVID-19 has exposed the fragility of an interconnected world. It is a public health crisis, but the underlying strengths and weaknesses of national responses are political and cultural. Political leaders too often wait for conclusive evidence before taking decisive action. The result: too little, too late.

Cities concentrate creativity, jobs and economic power. They also concentrate risk. At the same time, they are playing a leading role in driving the sustainability agenda, often in the face of weak national political commitments to large-scale, urgent change.

Peter Kingsley, in the final essay in the current Insurance Futures series, commissioned by Milliman, explores how cities are on the front line in the race to reduce climate change and biosphere risks, and avoid the ‘too little, too late’ scenario. The decisions city leaders take over the next decade will shape the future of the planet.

The insurance industry has a vital role to play in underwriting and financing responses to both the physical and systemic transition risks, working in partnership with city leaders. It also has an opportunity to drive systemic innovation, in the public interest.

Innovation to address climate and biosphere sustainability is both a source of solutions to urgent problems and a source of systemic technological, socio-political and financial risk.

In the eighth essay in the Insurance Futures series, commissioned by Milliman, Peter Kingsley explores how novel forms of complex risk will emerge as industries, trade, financial markets and political systems—each fragile—adapt. We can expect shockwaves where global systems are not risk-adjusted for possible downsides, or for sudden changes in government policies and unintended consequences.
Less well recognised, shocks will emerge as far-reaching innovation transform entire sectors.
The insurance industry has a vital role to play, supporting vulnerable communities and working with everyone from city and corporate leaders to inventors of high risk technologies. The challenge: cut carbon emissions, reduce pollution and create an orderly transition to a sustainable world.