How do you define risk? Common to most definitions of risk are terms such as ‘uncertainty’ and ‘negative outcomes’, with risk expressed in risk registers as a function of probability multiplied by impact to generate a quantitative view of risk. But with risks continuing to surprise leaders, there is still work to do building a shared understanding of what risks matter, which can compromise taking effective action. In our Emerging and Interconnected Risks Survey 86% of respondents didn’t know how their organization defined ‘emerging risks’ and 50% were unable to share the top emerging risks. The good news was the recognition of this uncertainty, with the top action to develop an emerging risk framework. For that framework to be effective, we share two insights in this newsletter that highlight the importance of revisiting how you define risk and outline actions for risk leaders to consider.
Markedly, 2024 became the first year on record to exceed 1.5°C above pre-industrial levels, a critical climate milestone. Hurricanes Helene and Milton struck Florida, whilst the Western Pacific saw its deadliest typhoon season since 2013. Our 2024 Nat Cat review explored the major insured losses, including the Valencia floods in Spain, and record insured Canadian Nat Cat losses. 2025 began with devastating LA wildfires, adding over $40 billion in insured losses – nearly one-third of 2024’s total – highlighting the combined effects of climate change and increased exposure in fire-prone areas. Occurring so early in 2025 may mean many U.S. primary insurers have already utilized a large portion of their catastrophe loss budgets for the year. To complement our existing research in this space we are delighted to announce new partnerships with Cornell University to quantify the risks of severe and sustained drought worldwide; and a new project with long-time WRN partners the Karlsruhe Institute of Technology (KIT), with NASA’s Disasters Program and the NASA Langley Research Center, to bring updates to the Willis European Hail model - the first stochastic hail model to cover the entire European region.
At the start of 2025 supply chain risks remain a key focus due to geopolitical tensions, with changing global relationships redefining traditional trading partnerships. Insurers must navigate evolving exposures, balancing supply chain resilience, regulatory shifts, and macroeconomic uncertainty to ensure sustainable underwriting in an increasingly complex. AI-driven automation mitigates some disruptions but increases cyber and intellectual property risks. Ahead of our 2025 WTW Global Supply Chain report due out soon, we explore the changing nature of supply chains in the context of AI. We also explore the specific impacts supply chain shifts are having on the semi-conductor industry.
As always, thank you for reading and please do get in touch with any questions.
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The latest WTW Natural Catastrophe review presents insights and lessons learned from major natural disasters in the second half of 2024, explores key themes of the year, and offers an outlook for early 2025.
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The impacts of an insurance loss this large so early in the year could ripple through the industry, but greater uptake of modelling solutions may help in the long run.
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Risk definitions can affect more than just the layout of a risk register. We explore why revisiting yours should be a key action in 2025.
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Putting an emerging risk framework in place was the top action from our Emerging and Interconnected Risks survey. For that framework to be effective, we suggest four actions for risk leaders.
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Explore how AI can be effectively utilized for risk management and sustainability in supply chain operations and identify the current gaps in AI advancements that need to be addressed.
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The semiconductor industry is in a paradoxical position, contributing to greenhouse gas emissions and playing a critical role in green transition. What role will market & consumer choices play?
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As a new solar maximum approaches, the historic Carrington Event draws parallels to contemporary natural catastrophes, highlighting the potential for significant economic and operational losses.
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Chemicals widely used across different industries are linked to health issues and environmental pollution. How can you identify and manage risks from ‘forever chemicals’ in your supply chain?.
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Geopolcast: Season 2 – Episode 2 explores the increased competition in Africa, including the growing presence of Russia and China.
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Effective leaders reassess current approaches to people and risk management to ensure they can navigate today’s geopolitical, technological and economic challenges rather than being steered by them.
