The COVID-19 crisis has brought to light new risks and trends, but a new report by Swiss Re Institute argues that the pandemic should not overshadow the need to transition to a more sustainable economy.
The reinsurer noted that the recession caused by the containment measures to curb the coronavirus outbreak is exacerbating longer-term structural problems, such as an increased pressure on intergenerational social contracts and disruptions to supply chains.
And pandemic will likely continue to prompt shifts in the political landscape, regulatory environment and in market dynamics, while bringing about a refocus in priorities as the world plans its economic recovery.
“After this global crisis, which shows the importance of forward-looking risk management, society will need to adapt to many changes, some of which will continue to linger on,“ said Patrick Raaflaub, Swiss Re’s Group Chief Risk Officer.
“As a risk knowledge company, it is our duty to raise awareness about new risks we pick up on the horizon and to continue to build resilience also in these unprecedented times.”
Swiss Re believes that the public and private sectors must focus on both global health and climate change as the world moves out of crisis stage and towards some form of post-pandemic norm.
The transition to a low carbon economy presents many opportunities, but also new risks for the insurance industry, including from carbon removal schemes.
As a starting point, analysts recommended that all sectors of the economy need to limit and reduce emissions as much as possible, in particular the transport, agriculture and building industries.
“The transition to a low-carbon economy requires political, technological and behavioral change,” the report stated.
“Finding new ways to cope with the required changes calls for innovation and offers new opportunities for business across different sectors, and in all core areas of insurance, including in risk knowledge and risk transfer as well as investment. The insurance industry can play a pivotal role by providing specialist risk transfer knowledge and capacity to partners in other sectors of the economy.”