Lloyd’s, the world’s leading marketplace for commercial, corporate and speciality risk solutions, today released a new report that identifies emerging geopolitical risks and provides businesses with practical advice on how to mitigate them. The recent shambolic exit of US and other NATO forces from Afghanistan highlights the decline of US power, and Western power in general, with China very much in the driving seat globally. It doesn’t take a tactical genius to predict that China will play divide and rule over the next 10-20 years, just as Britain, France, Russia and the USA did in the 20th century.
Shifting powers: meeting the challenges of the geopolitical landscape, produced in partnership with the University of Cambridge’s Centre for Risk Studies, explores the transformation of the geopolitical risk landscape over the last decade and focuses on the ten most pressing risks these themes present today, which range from cyber-attacks, social unrest and the migration crisis.
The research found that geopolitical power centres have shifted since the financial crisis, driven by five macro-trends, including rising populism and the decline of the US’ role as a conflict mediator. The research also provides a strategic perspective on these systemic risks, whilst analysing their probability and impact.
The report identifies terrorism as one potential risk, and notes that attacks by Islamic State may well affect the global supply chain, rating this scenario as being `likely.’ However that global supply chain is already being controlled, quite tightly as Toyota found out recently, by China. There’s no mention of that in the Lloyd’s report, or China’s ability to ration other vital parts for cars, buildings, electronic devices, food production and distribution.
Through the Lloyd’s Lab, Futureset, and the Product Innovation Facility, Lloyd’s will continue to bring the industry together to help communities and businesses build resilience against geopolitical risk.
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.”
Andrew Coburn, Chief Scientist at the University of Cambridge’s Centre for Risk Studies, added: “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 which underpin global commerce from a host of geopolitical risks as they intersect with technology, public opinion, climate change, and other factors. We are delighted to contribute to this thought leadership promoting ambitious and necessary changes within the industry which will help to safeguard us all.”
Lloyd’s emerging risk report, “Shifting powers: meeting the challenges of the geopolitical landscape”, can be accessed here.