The report identifies various threats stemming from dynamic changes in technology, geopolitics, and society.
One prominent emerging risk highlighted in the SONAR report is the “Arctic opening,” which encompasses technological, economic, social, and environmental factors. As the Arctic region experiences accelerated warming and subsequent ice melt, new shipping routes are becoming accessible. However, the increased economic activity in the area also brings potential geopolitical tensions and concerns about risk management in the region.
“The concurrent increases in economic interests, environmental change, and geopolitical tensions make the Arctic a hotbed for emerging risks and potential risk accumulation,” said Patrick Raaflaub, Group Chief Risk Officer at Swiss Re. “With SONAR, we aim to proactively engage our clients and industry stakeholders in discussions on emerging risks, as we believe this is the best way to be prepared.”
Another futuristic yet significant risk explored in the report is solar radiation management (SRM) technology, which has the potential to cool the Earth. Although it does not address the underlying cause of global warming, namely greenhouse gas emissions, SRM has the ability to reduce global temperatures.
However, implementing techniques such as injecting reflective particles into the atmosphere poses environmental risks and the potential for international conflicts, according to Swiss Re. The abrupt termination of SRM could result in rapid temperature increases, leading to extreme weather events like droughts or hurricanes. This raises the question of how to compensate those affected by these adverse effects.
In the technology sector, complex machine learning systems and artificial intelligence present another emerging risk. While AI advancements offer numerous benefits, they also come with potential risks. Hackers can manipulate AI models, resulting in errors, data leaks, compromised training data, or theft of machine learning models.
The SONAR report states that the rise of AI increases the opportunities for fraud and intellectual property loss. For instance, phony creditworthiness ratings or false insurance scores could be generated. In the field of car insurance, AI-based claims management systems could be deceived into detecting significant damage where none exists. In more severe cases, if AI systems are hacked, it could lead to physical harm, such as autonomous car crashes or medical misdiagnoses, warned Swiss Re.