Arthur Wightman, PwC Bermuda territory and Insurance leader, has suggested that Bermuda’s insurers have a substantial opportunity to increase global resilience.
Wightman’s comments follow a PwC Global CEO Survey which polled 4,410 CEOs in 105 countries and territories, including Bermuda and the Caribbean region, throughout October and November in 2022.
PwC’s survey found that climate risk did not feature prominently as a short-term risk over the next 12 months relative to other global risks.
In the insurance sector, CEOs ranked it as the fourth biggest risk they face over the next 12 months, while inflation was number one.
However, according to the survey, over the next five years climate change increases as a threat for CEOs, becoming a top threat for CEOs in the Caribbean CEOs.
The poll found that CEOs across all industries see climate risk impacting their cost profiles (50%), supply chains (42%) and physical assets (24%) from a moderate to a very large extent.
As mentioned, CEOs in the Caribbean feel particularly exposed, with 68% seeing the potential for impacting their cost profiles, 58% to supply chains, and 38% to physical assets.
PwC does note that a majority of CEOs are in the process of, or have already implemented initiatives to reduce their companies’ emissions (65%), in addition to innovating new, climate-friendly products and processes (61%), or developing data-driven, enterprise-level strategy for reducing emissions and mitigating climate risks (58%).
Wightman added, “Combating climate change requires a coordinated, long-term plan. It won’t be solved if the only companies working on it are those that face immediate financial impact.
“Bermuda’s insurers have a substantial opportunity to increase global resilience, however, success at driving climate risk innovation depends on whether there is the appetite to tackle accelerating problems being caused by climate change.”
Further, PwC’s survey found that 73% of global CEOs believe global economic growth will decline over the next 12 months, the most pessimistic outlook in over a decade, while 40% of CEOs think their organisations will not be economically viable in a decade should they continue on their current path.
PwC suggests that the pattern is consistent across a range of sectors, including insurance (37%), telecommunications (46%), manufacturing (43%), healthcare (42%) and technology (41%).
Meanwhile, CEO confidence in their own company’s growth prospects also declined dramatically since last year (-26%), the biggest drop since the 2008-2009 financial crisis when a 58% decline was recorded, says PwC.
Wightman commented, “We are seeing a level of pessimism among CEOs not seen in over a decade. The risks facing organisations, people and our planet are relentless. Consequently, CEOs globally and here in Bermuda are re-evaluating their operating models and reducing costs.
“If organisations are to survive the next few years – they must carefully balance the dual imperative of mitigating short-term risks and operational demands with long-term outcomes.
“CEOs face an incredible challenge to reinvent the business for the future, but also an opportunity to lead with purpose, be a catalyst of innovation, and help solve important societal problems.”
As for the most substantial risks in the short term, the impact of the economic downturn leads this year’s poll, with inflation (40%) and macroeconomic volatility (31%) leading the risks weighing on CEOs in the next 12 months and over the next five years.
Close behind, 25% of CEOs also feel financially exposed to geopolitical conflict risks, whereas cyber risks (20%) and climate change (14%) have fallen in relative terms.