The next generation of strategic risk management must deliver a better understanding of systems, how events crystallise and propogate, and how imagined futures shape human responses. The grand challenge is to reinvent governance to match the demands of a potentially chaotic world dominated by the cascading impacts of poorly understood, fast-moving events that threaten fragmentation and breakdowns in trust. In other terms, the challenge is to shift from short-term reactive policy to foresight-driven, agenda-setting and pre-emptive action. Peter Kingsley and Dame Wendy Hall show that nowhere is the challenge as acute or urgent as in the deeply interconnected worlds of AI, peace and war.

COVID-19 has exposed fundamental weaknesses in national and global health systems. Nigel Crisp explores how the crisis may mark a turning point, accelerating cross-border medical invention and collaboration. It may shift focus towards a revolution in ‘health creation’ in the home and community, leaving hospitals ‘for repairs’ and transforming policy to address the underlying causes of poor health, from pollution to social inequality.

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.

The deployment of an estimated trillion connected devices by 2035 and the roll-out of both Augmented and Virtual Reality technologies will create a new hybrid reality. The physical world and digital representations of it—together with entirely new virtual worlds—will co-exist. People will move from one environment to another in daily life.

In the seventh essay in the Insurance Futures series, commissioned by Milliman, we explain why the hybrid reality environment will create new approaches to risk management and why it will bring major new risks to systems, people and places along with it. The implications for the insurance industry will be profound.

The jury is out on whether it will be the police or the criminals who will benefit most from an increasingly networked world.

In the sixth essay in the Insurance Futures series, commissioned by Milliman, we explore alternative scenarios for the future of policing and crime.

In one scenario, over-stretched law enforcement organisations are overwhelmed as criminals use everything from automated cyber-crime and quantum computing to the Internet of Things (IoT) to engineer a digital ‘crime harvest’.

In the other, predictive policing technologies, skilful exploitation of the IoT as digital crime scene and widespread use of blockchain technologies combine to make crime prevention and detection so effective that crime rates drop dramatically.

Unprecedented uncertainty hangs over international trade. This extends well beyond the short-term prospects for US-China trade relations and the simplistic narratives about post-globalisation.

In the fifth essay in the Insurance Futures series, commissioned by Milliman, Philippe Legrain explores how climate crises, digital technology, virtualisation and other policy drivers may both localise and globalise.

Political rivalries and the decline in the US-led liberal international order amplify trade and climate risk. Future scenarios range from the collapse of globalisation at one extreme to cooperation restored at the other, with strategic competition or conflict as intermediate possibilities.

Geopolitical competition, migration, national populism, accelerating technological change, media manipulation and climate change are transforming the political risk landscape. The challenges to leadership teams are complex, interdependent and characterised by radical uncertainty.
In the fourth of a series of essays on Insurance Futures, commissioned by Milliman, Mat Burrows explores two possible extreme scenarios that may emerge to 2035.
In one, he outlines ‘the possible pathway to war’. In the other, a ‘resurgence of cooperation’.
He also considers some of the implications for the insurance industry and the vital importance of political risk. Our experience is that by exploring extreme possible futures, scenarios can create a framework within which policy options, hedging and business strategies can be developed. Too often, decision-makers wait until crises are upon them, by which time it is too late. It takes judgment and courage to make decisions in conditions of uncertainty.

Regulators, banks, insurers, corporations and institutional asset managers share a problem: how to ‘transition’ to a sustainable world, whilst maintaining financial stability.

The two are in conflict. Timing is central. Climate, in many parts of the world, is changing fast. Culture, contrary to conventional wisdom, can change in weeks and months, as futures are re-imagined and new narratives emerge. Politics, even faced with long-term strategic and possibly existential risk, is characterised by prevarication and delay.

In the third of a series of essays on Insurance Futures commissioned by Milliman, Peter Kingsley argues that shocks to the financial system will emerge long before the full impacts of climate change are felt and sea levels rise, as investors make large-scale changes to their asset portfolios. The fundamental structures of asset management and insurance will be transformed. Some regions will be uninsurable. Radical transparency will force sectors, individual corporations and financial institutions to re-invent themselves, or face failure.

There are three broad long-term financial scenarios: ‘Too Little, Too Late’, ‘Stable Transition’ and ‘Crisis Now’.

2055: the village of Newtok in Alaska is no more. In other parts of Alaska, mass migration from uninhabitable southern and south-eastern parts of the US has begun. The United Nations global estimates are that a third of a billion people have lost their homes and businesses and a further half billion are highly vulnerable to displacement by 2100. Large parts of The Maldives, the Marshall Islands, Tokelau and Tuvalu, and Kiribati have been overwhelmed. In the Indian Ocean, similar problems are being experienced at an entirely different scale in the delta regions of the rivers Ganges, Brahmaputra, Irrawaddy (Ayeyarwady) and further east, the Mekong, and in China the Pearl.

Professor David Drewry, former Director of the British Antarctic Survey, former Director of the Scott Polar Research Institute, Cambridge University and member of the IPCC, explores a fictional account, based on current science. He argues that extreme futures are possible. Estimates for temperature rises, sea levels and storm surges and their impacts may be underestimated.

“Politics is how we choose who wins and loses” and “prevarication is a typical response of governments faced with hard choices”. This will not work for a time-bound problem like climate change, as Tom Burke, a member of our editorial board, puts it in the second of the series of Insurance Futures essays commissioned by Milliman . Understanding complex risk and modelling the potential for long-term systemic crises will create multiple opportunities for the insurance industry and risk specialists, as they evolve from providers of transactional services to advisors and primary actors.

Contrary to conventional wisdom, in chaotic social and political environments, culture can change rapidly. In the first of a series of essays on Insurance Futures commissioned by Milliman, we explore how climate-related ‘pre-shocks’, in the form of sudden changes in public and market sentiment, will emerge long before physical events, such as irreversible damage to low-lying cities. In extreme scenarios, over the next decade we may face a perfect storm of runaway climate change; political panic measures; radical innovation; culture shocks; and environmental activism. Cultural values will be decisive in the transition to a sustainable world. The insurance industry has a vital role to play.

AI is a new force shaping the future of world politics. This essay goes beyond the emerging US-China technology Cold War, to consider the impact AI will have on the global balance of power, the future of warfare and arms control, the emergence of new technology spheres of influence, terrorism, and the role both middle powers and small states might be able to play in shaping the AI driven world of the future. Understanding and navigating the disruption that lies in store, including its possible extremes, is going to be a major strategic challenge for businesses and governments alike.

In 1945, George Orwell, in a famous essay ‘Politics and the English language’ said that

“In our age there no such thing as ‘keeping out of politics’.  All issues are political issues, and politics itself is a mass of lies, evasions, folly, hatred and schizophrenia. When the general atmosphere is bad, language must suffer.”

Today machines automate deep fakes. China is characterised as a ‘surveillance state’ and the West is captive of ‘surveillance capitalism’. Mass-scale manipulation by governments, political activists and terrorists make daily headlines but the workings of complex networks remain opaque. Secret states and unregulated technology companies host the ‘lies, evasions, folly, hatred and schizophrenia’ that Orwell talked about.

Yet, even now, few people recognise the real danger that machines will not ‘keep out of politics’. Peter Kingsley revisits Politics and Machine Language, with a new introduction.

Stephen Bayley, one of the world’s leading ‘design gurus’ and co-founder of London’s Design Museum, explores the future of the car. The automotive industry is conservative, yet ‘by the time a conventional new car is launched, its designers have already designed the replacement of its replacement. Thus, with an eight-year product life-cycle, designers are already in 2035’. As he puts it ‘Cars may become ever more like mobile architecture: spaces to be enjoyed. But what will replace the fascination and romance?’ Attachment to cars, like all consumer behaviour, is not about rationality. Driverless cars will lack soul.

Thierry Malleret explores how Environmental, Social and Governance (ESG), a shortcut for sustainability, will dominate corporate, investor and financial market thinking. The statement by the US Business Roundtable will be seen as an historic ‘inflection point’. This is the culmination of two primary sources of crisis: the fragility of capitalism and the inability to deal with inequality, and the urgency associated with the accelerating climate crisis.

Contrary to conventional wisdom, culture can change fast, particularly in times of chaos and uncertainty. Prepare for fundamental structural change. In an extended version of an earlier essay on the role of imagined futures and cultural realities, Peter Kingsley explores how guiding narratives that have dominated for decades may be overwritten. The time has come for radical re-think in how we think about the future and see shocks coming.

The secret world of innovation escapes mainstream political and financial market attention. The result is that radical change is largely discounted. Yet innovation is the primary driver of real world economic development and productivity. On the horizon, a marketplace of ideas, based on openness and codified knowledge-sharing; patent exchanges; and machine creativity. The darker side: a battle for supremacy, a culture of leadership rivalry, conflict, cyberwar and challenges to national pride. The future revolves around competition for ideas and intellectual property. This essay, revised and updated from the original written in June 2017, foreshadows a new era that may yet emerge, however current US-China trade battles play out.

Imagine you had an accurate picture of the future. Then imagine that the future threatened your interests. What would you do? We argue that the answer, too often, for corporate and political leadership teams, is to keep the picture secret, or create confusion and a web of deception. In other words, to misuse foresight.

With rationalism, scientism, big data and artificial intelligence promising answers to everything, we have forgotten the importance of creative imagination.

The paradox is that, contrary to conventional wisdom, confronted by an increasingly complex, interconnected and uncertain environment, imagined futures dominate our lives. We are shaped by our simulations, predictions and mental frameworks, continually re-inventing the world around us. We communicate our imagined futures through the stories we tell. Imagination is the engine of creation.

Tom Burke, Chairman of E3G, explores the challenges of financing the global energy transition in the context of the complex ‘system of systems’ relationships between energy, financial institutions and underlying political stability. There are no single solutions, but rather a portfolio of options that blend public and private finance and differ from place to place. National carbon prices will be more important for the revenues they generate than the signals they give to energy investors. In his view there is no prospect of a global carbon price.
There is a momentum swing amongst the world’s regulators, major investors, central bankers and international financial institutions that signal growing willingness to redirect financial flows to meet the climate challenge. The politics of the energy transition may prove more of an obstacle to safeguarding the climate than either the technologies or the financing. As he puts it “To get the politics of climate change right we must also think through the social adjustment that will accompany the technology and investment changes”.

Mat Burrows explores the global risk landscape in the year ahead, a landscape characterised by political, economic and security volatility and looming crises. We are slipping towards a bipolar world pitting Russia and China against the West, increasing the scope for violence in the Middle East and elsewhere. It will take leadership on all sides to stop the drift. With multilateral collaboration weakening, the risks of inaction on climate change are growing.

Lord Nigel Crisp, formerly CEO of the National Health Service in England, explores how science, digital sensors and artificial intelligence hold the promise of transforming well-being, health and care for millions around the world. They are not, however, a panacea or silver bullet. Health promotion and disease prevention are coming to the fore. We are seeing an increasing need for care, empathy and societal action. Artificial intelligence will be very important, but human and emotional intelligence and trust will be needed more than ever.

The Rome Scenarios, now updated, range from the chaos of ‘Dark Ages’ to the volatility of ‘Walled Gardens’ – a world of enlightened and inclusive nationalism. ‘Renaissance’ describes a multi-lateral vision of a world of mutual understanding that many people might like to create for future generations.

Philippe Legrain suggests that the global economy is ‘finally firing on all cylinders’, with the exception of Brexiting Britain. The US and eurozone economies in particular may be shifting to a higher growth path as they escape the ‘long shadow of the financial crisis’. They have the potential to continue growing without ‘sparking inflation’ and to ‘reap much greater productivity gains’, even if their timing remains uncertain.
There are, however, dark clouds on the horizon. Populist politics looks here to stay. While populist policies may be positive for the economy initially, they threaten to ‘wreck the domestic institutions than underpin economic growth’. Worse, President Trump may undermine confidence in the dollar and the international monetary system and cause catastrophic trade wars. Might we snatch political defeat from the jaws of economic victory?

Chandran Nair makes the case for independent pan-Asian publishers to reflect the fundamental and accelerating shift in the centre of gravity from West to East. We live in a world ‘where the wealth of knowledge from the non-Western world largely goes unrecognised and worse, unpublished. This is both a tragedy and a significant problem for Asia and the world…’ The world is dominated by Western narratives, that shape how people think.
This is not simply about publishing, but the importance of Asian voices in Asia on global issues, culture and in setting the future agenda. As he puts it ‘… as Western insecurities about a post-Western world take root it is critical that a larger Western audience is exposed to ideas and opinions from the rest of the world’.

Mat Burrowsexplores the idea that China’s rapid transformation in innovation and science, technology, engineering and mathematics is a ‘Sputnik’ moment for the US and the West. He makes an assessment of the deep entanglement between the US and China, ranging from industry, education and investment to whether collaboration or competition will dominate the future agenda.

In 1945, George Orwell wrote a famous essay entitled ‘Politics and the English language’. He said:

‘The great enemy of clear language is insincerity. When there is a gap between one’s real and one’s declared aims, one turns as it were instinctively to long words and exhausted idioms, like a cuttlefish squirting out ink. In our age there no such thing as ‘keeping out of politics’. All issues are political issues, and politics itself is a mass of lies, evasions, folly, hatred and schizophrenia. When the general atmosphere is bad, language must suffer.’

On the horizon, machines may not only understand language – so they help us search for the latest gadget, or act as servants – but become authors. The signs are there. Machines already write routine news reports and even formulaic popular novels, driven not by understanding language, but by a growing recognition that emotive words sell.

In academic terms, machines have agency. They will increasingly manipulate our emotions, shape what we think, frame our daily lives. Will they be sincere? Will they ‘keep out of politics’?

No. Welcome to the age of politics and machine language, circa 2025 and beyond.

From fears about long-term employment shaping election outcomes, to the rise and rise of intangibles, to machines as inventors, the shape of the innovation landscape foreshadows volatility and radical change. Systemic innovation will drive structural disruption across all industry sectors and asset classes, driving growth and productivity, but there are darker forces at work.