Unearthing the emerging risks of tomorrow…

Combining the right data, AI algorithms and APIs to shape new business models

According to O.R.X., the top three risks in the banking sector in 2020 are climate change, AI and operational resilience. According to Willis Towers Watson, the top three most dangerous risks faced by insurance company executives are cybercrime, disruptive technology, and pricing and profit. Disruptive technology leaders know the challenges they face. The question is how to solve them.

New risks are emerging every year

Insurers and financial services companies are good at keeping abreast of long-term risks. Major insurance players such as Allianz, AXA, Munich Re, and Zurich frequently cited climate change as their top emerging risk on their materiality assessment matrices, along with inclusive workplaces and digital transformation. Similarly, surveys of banking executives show an awareness of the need to mitigate climate change, focus on cyber security and data privacy, and the need to adapt to turbulent global macroeconomic trends.

As the Covid-19 crisis has shown, new unexpected risks can emerge at any time, adding to the challenges disruptive technology leaders face. Cybercrime is on the rise, costing global firms more and more each year both in terms of insurance claims, reputational damage, and the expense of protecting themselves from attacks.

External market forces and competition from digital-first players remain a constant threat. For insurers, the inability to service underinsured segments such as gig economy workers and small businesses is also a risk to future growth. For financial services, keeping up with the digital demands of consumers and evolving new operational models is a priority.

While Covid-19 has been a serious destabilizing factor, it also acted as a catalyst for innovation. Thousands of growth ventures (having raised multiple billions of funding) were able to adapt their proposition in weeks to meet the needs of struggling customers. Clearly, where there is risk there is also opportunity.

The disruptive leader needs accurate data, algorithms and emerging tech

Although incumbents recognize the need to evaluate future risks – known and unknown – too often they are forced to rely upon historical data. Insurance businesses and financial firms must improve their ability to assess current and future risks on an individual and aggregated portfolio basis. Only then can they determine the impact of new scenarios and make accurate growth predictions.

This entails being able to access new data sets, advanced algorithms and extensive emerging and evolving technologies to quickly adapt business model strategies and operations as needed.

The Emerging Risk Reinvention Engine

It is time to identify and plan for the variety of risks emerging today – as well as those likely to emerge in the future. This reinvention engine from Alchemy Crew will assess those emerging risks with the highest immediate impact for organizations and that can yield positive outcomes.

We also leverage our extensive network of tech ventures, data and AI specialists to evaluate the best-suited solutions for any complex environment.