Financial concerns bump environmental risks from industry’s risk list

Environmental risk has dropped from the Top 10 risks facing the insurance industry and has been replaced by concerns related to investment returns, equity performance and access to capital, a joint survey between the Centre for the Study of Financial Innovation and PriceWaterhouse Coopers found.
The latest Insurance Banana Skins survey includes 400 responses from 39 countries. Respondents are asked to rank the risks facing the insurance industry.
Investment performance, equity markets and capital availability were the Top 3 risks in 2008. None of these three made the 2007 list of Top 10 risks.
Rounding out the remaining seven risks in 2008 are:
•    Macro-economic trends (did not make the list in 2007);
•    Too much regulation (the top risk in 2007);
•    Risk management techniques (placed 14th in 2007);
•    Reinsurance security (placed 27th in 2007);
•    Complex instruments (placed 19th in 2007);
•    Actuarial assumptions (placed 8th in 2007); and
•    Long tail liabilities (placed 7th in 2007).
“Very striking is the sharp fall in concerns over environmental-type risks,” a PwC release says. “For example, natural catastrophes and climate change, which were in the Top 10 in 2007, are now ranked in the 20s.”
This is partly because there have been fewer major events, but also because the industry sees more immediate risks, PwC suggests.
“The underlying message of this survey is about crisis management,” says George Sheen, leader of the PwC Canada financial services practice. “The industry is focused on their big three risks: responding to low investment returns, ensuring access to capital and managing the impact of a challenging global economy.”