Russell Group’s Basi: Collaboration, new skills needed in connected risk landscape
Russell Group managing director Suki Basi has warned the industry the increasingly connected risk landscape across the global economy means modelling exposures is now more complex than ever before.
During a briefing at this year’s Rendez-Vouz in Monte Carlo, Basi outlined how inflation, cost of capital, and the interconnected nature of global trade have created an increasingly complex risk environment for insurers to operate within.
“Plenty of people have discussed rising costs, but the complexity that's within the risk landscape means that the industry is facing complexity from a modelling perspective that it has maybe never had to deal with before,” explained Basi.
Basi indicated a number of ways in which the industry can respond to this risk environment to narrow the insurance protection gap and deliver more certainty on net exposures.
This includes collaboration between (re)insurers and corporates, the development of new skills, impact analysis, and a forward-looking approach to threat scenarios.
On skills, Basi said: “We’ve noticed the skills gap has actually grown, particularly between young and old. This was exacerbated by hybrid working, but also where the complexity of the risk landscape is presenting requirements that individuals have never seen before.”
“The need to collaborate and develop skills is essential if we're going to be resilient as an industry,” argued Basi.
The briefing also saw the Russell Group team outline a number of exposure scenarios they felt underpinned the dangers inherent in the modern risk environment.
Scenarios included a potential $500bn economic loss from a storm with characteristics of the Galveston storm of 1867, losses largely falling on offshore energy and coastal areas in the Gulf of Mexico.
In aviation, Russell outlined how a blockade in the event of a Chinese invasion of Taiwan could see ground accumulation insured exposure of $7.2bn.
Basi offered further detail on the rapidly changing risk landscape in a viewpoint published at this year’s Rendez-Vouz, which you can read here.