Swiss Re has released its 10th annual SONAR horizon scanning report. It highlights that new risks are arising while the global community deals with known challenges such as the pandemic, war in Ukraine, economic turbulence and failing trust in established social institutions.
Crypto assets and quantum computing create new risks
In the current highly technology-dependent financial system, cryptocurrencies such as Bitcoin and Ether have established themselves as potential challengers to conventional currencies. Alongside these new forms of currency, further crypto assets have emerged. Tokens, for example, allow people to buy digital representations of real assets such as art works or real estate. They can be traded and grant their owner access to assets, products, or services. Nowadays, an art lover can buy a fraction of a Picasso. The fluid ownership, taxation, regulatory issues and other risks related to the new asset classes present insurers with fresh challenges. For instance, are certain crypto assets implicitly covered by existing property or cyber policies?
The security of the new digital financial economy is also facing new risks. With quantum computing, for example, a new generation of computers is on the verge of completing tasks far beyond the reach of current machines. These hyper-smart technologies offer significant benefits: sophisticated weather modelling, advanced medical research capabilities and financial analysis. With increasing maturity, they can also become a threat to existing IT security protocols, potentially hacking standard encryption keys used in online communications and data transfer.
A new generation of emerging risks arising from climate change
Swiss Re identified the threat of climate change as far back as 1979. More than 40 years later, the consequences of climate risk are very much present in our everyday lives. Beyond what we already see, climate change creates a new generation of emerging risks. This year's SONAR report explores how the thawing of permafrost, which covers a quarter of the northern hemisphere, could not only damage infrastructure and accelerate climate hazards but also release disease-carrying pathogens that have been frozen for decades.