UPFRONT
STATISTICS
What lies ahead
Canada
79.20
Overall risk score, 2017
84%
of finance professionals say forecasting risk is as hard or harder than three years ago
51%
anticipate that forecasting risk will be more challenging three years from now
Overall risk score, 2016
77.30
Overall risk score, 2017
78.30
What issues, trends and factors pose the greatest threats to the world in 2017? THE WORLD is no stranger to political risk in 2017. China and Russia top the list of countries most likely to influence the risk landscape this year, due to factors such as succession risks, conflict and regional instability. But the West is by no means immune from events that stoke geopolitical risk – the ongoing ramifications of the UK’s Brexit vote are still playing out on one side of the Atlantic, while
80.30
US
Overall risk score, 2016
the consequences of last year’s US presidential election continue to be felt on the other. Both events – along with contentious elections in places like France and the Netherlands – point to the rise of protectionism, nationalism and anti-establishment parties in countries worldwide. This apparent turning of the tide raises new concerns for insurers – and therefore brokers and their clients.
67%
of companies have made efforts to mitigate exposure in response to current and emerging threats
WHICH COUNTRIES ARE MOST AT RISK? In looking at political, economic and operational risk worldwide, Marsh found that Africa, the Middle East and parts of South America are still the least stable in terms of their ability to deal with such shocks as economic calamity or abrupt political changes. However, a closer look at some key countries reveals that stability has fallen slightly across the globe over the past year. RISK SCORE
60%
< 49
of organizations have maintained liquidity due to the threat of geopolitical risks
50-59
60-69
70-79 80-100
Unstable
Stable
Source: Marsh & McLennan/Association for Financial Professionals, January 2017
MITIGATING RISK WITH DATA Given the current climate, more companies are committing to using risk data and analytics to inform decision-making.
How is your organization using risk data and analytics? To improve risk identification (50%) To inform the overall business strategy (43%) To enhance risk mitigation (34%)
WHICH RISKS ARE MOST LIKELY? According to the World Economic Forum’s Global Risks Report, geopolitical risks (shown in orange below) have taken on more prominence in recent years in terms of the risks businesses feel are most likely to happen.
2012
To support major transactions (25%) To facilitate risk reporting (21%) To optimize insurance programs (17%) Source: Marsh & McLennan/Association for Financial Professionals, January 2017
4
2014
Income disparity
Income disparity
Income disparity
Chronic fiscal imbalances
Chronic fiscal imbalances
Extreme weather events
Rising greenhouse emissions
Rising greenhouse emissions
Cyber attacks Water supply crisis
To understand risk-bearing capacity (28%) To inform decisions on specific risks (26%)
2013
2015 Interstate conflict with regional consequences Extreme weather events
2016
2017
Large-scale involuntary migration
Extreme weather events
Extreme weather events
Large-scale involuntary migration
Unemployment or underemployment
Failure of national governance
Failure of climatechange mitigation and adaption
Major natural disaster
Water supply crisis
Climate change
State collapse or crisis
Interstate conflict with regional consequences
Large-scale terrorist attacks
Mismanagement of population aging
Cyber attacks
Unemployment or underemployment
Major natural catastrophes
Massive incident of data fraud/ theft
Societal
Economic
Environmental
Geopolitical
Technological Source: World Economic Forum
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