Insurers, governments, tech companies, and risk owners (consumers and businesses), all have a role to play in facing a new risk landscape in a constructive way. Old playbooks will no longer provide guidance, and the once solid concepts that describe and define the dimensions of risk management – like liability or the governance and regulatory models for a cyber world that can be physical, virtual, or some combination of the two – have become more complex and uncertain.
Oliver Wyman has been fortunate to serve as a knowledge partner to the World Economic Forum as it and a multi-stakeholder group comprised of insurers, academics, government officials, and tech innovators confront these challenges. One output of this work released recently was a report based on surveys, interviews, and roundtable discussions. This incisive and thought-provoking study, Mitigating Risks in the Innovation Economy: How Emerging Technologies are Changing the Risk Landscape, sets the context in which those who manage risk now find themselves, and provides recommendations to help companies and governments anticipate and address the challenges and opportunities offered by the emergence of technological innovations.
What are some of the recommendations coming from this report? Looking across the landscape, they focus on four groups: insurers, government, technology players, and risk owners.
Insurers need to embrace risk education, getting actionable information in front of public and private organizations. They should also develop new approaches to measure and assess risk that capture the wealth of data now available, looking at alternative data sources and creative modeling. Finally, they need to be mindful of protection gaps and unmet needs and look for creative solutions, like getting involved earlier in product development.
Governments, which have to date engaged inconsistently along a continuum from hands-off to highly regulated in their attempt to meet and manage new technology, need to balance their traditional response, regulation, against more informal and collaborative guidance with technology developers. The report highlights the use of “policy sandboxes,” which have been effective in the financial services industry as it meets fintech challenges, as one means to educate regulators and allow them to experiment with different approaches, while at the same time fostering innovation.
Technology players need to adopt a greater role as stakeholders in a complex risk management ecosystem and ask themselves how they can use their expertise to collaborate on industry standards and support risk mitigation solutions.
Finally, risk owners, comprised of companies or consumers that adopt and deploy new innovations, need to assume responsibility for balancing wholehearted adoption against potential downside consequences. They need to educate themselves on the potential risks of new technologies and modeling the magnitude of disruptive technology risks.
These are big tasks, and the purpose of the report is to start a dialogue among these stakeholders toward collaborations that result in market-based solutions that build resilience.