Lloyd’s report aims to help corporates tackle shifting geopolitical risks

A new report from Lloyd’s has laid out key steps companies can take to help manage emerging geopolitical risks and says the challenges thrown up by the new landscape may radically change the relationship between insurers and risk professionals. The report, Shifting powers: meeting the challenges of the geopolitical landscape, produced in partnership with the University of Cambridge’s Centre for Risk Studies, identifies emerging geopolitical risks and provides businesses with practical advice on how they can be mitigated. It finds that geopolitical power centres have shifted since the financial crisis, driven by five macro trends, including rising populism and the decline of the US’s role as a conflict mediator. It also focuses on the ten most-pressing risks these trends present today, which include cyberattacks, social unrest and the migration crisis. The report suggests ten questions that risk managers can ask to help their organisations mitigate geopolitical risks. These are: Does your company have someone with clear responsibility for managing geopolitical risks? Are you monitoring upcoming elections and considering how key infrastructure in your key regions could be affected? Have you put measures in place to guard your IP and trade secrets against a major cyberattack? Could your reputation stand up to increased environmental scrutiny? Have you reviewed likely changes to customer sentiment in affected regions? Given the trend towards home working, can you move your offices out of city centres? Have you considered your supply chain exposure? Do you review your legal contracts with suppliers and customers from the perspective of geopolitical risks? Have you reviewed your medium- and longer-term strategies for exposure to infrastructure projects? Have you explored how a long-drawn-out conflict would affect your business, compared to a short duration event? The report goes on to discuss a “significant” geopolitical protection gap when it comes to insurance that leaves vital supply chains, smaller businesses and emerging economies highly exposed to disruption. But it says the challenges thrown up by the geopolitical risk landscape may lead to innovation and a “transformation in the relationship between insurers and risk professionals, by fostering improved data stewardship and threat monitoring across high-risk areas”. Andrew Coburn, chief scientist at the University of Cambridge’s Centre for Risk Studies, commented: “The changing nature of geopolitics poses a significant challenge to an industry traditionally associated with protecting physical assets. Insurers must innovate to safeguard the dependencies and complex operational practices that underpin global commerce from a host of geopolitical risks as they intersect with technology, public opinion, climate change and other factors.” The report details the existing insurance solutions available to help businesses stay resilient during periods of crises and uncertainty, and identifies opportunities where the insurance industry can help develop new solutions to address these risks. Lloyd’s said it aims to use the research to support businesses with the resources and knowledge required to help protect their organisations. Bruce Carnegie-Brown, chairman of Lloyd’s, said: “The geopolitical landscape is more complex, intricate and interconnected than ever before. Lloyd’s has a unique role as a hub of risk expertise and innovation, and we are delighted to have partnered with the University of Cambridge’s Centre for Risk Studies to identify ways we can help businesses manage these geopolitical challenges. Lloyd’s, and the wider insurance industry, can play a central role in addressing geopolitical risk, and in doing so create a safer, more sustainable world.”

Lloyd’s report aims to help corporates tackle shifting geopolitical risks

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