The world’s future socioeconomic issues–and their impact on the insurance and financial services sectors-are laid bare in the latest CII “Future Risk” report, published as part of the professional body’s Centenary activities.
Entitled “Social and economic challenges for tomorrow”, the report predicts three possible scenarios based on insight derived from specially-commissioned essays by five leading experts including:
-David Smith of the Sunday Times on UK competitive advantage
-George Magnus of UBS tackling the economic implications of global longevity trends
-Dr Uri Dadush of the Carnegie Endowment for International Peace on the long-term economic outlook for the USA
-Andrew Leung, China specialist on the future of Chinese monetary policy
-Laurence Whitehead of Oxford Analytica dealing with uncertainty in an increasingly globalised and risk averse world.
The three future scenarios deduced from their arguments set out very different outcomes for the world and the financial services sector:
In the Upside Scenario, the West is resurgent while the East thrives, with countries collaborating on the major socioeconomic problems. In the insurance sector, Western companies remain competitive though pressurised by Asian providers.
The Central Scenario depicts Asian growth and Western stagflation, with countries acting in a more isolated manner and insurance businesses operating in emerging markets managing to prosper.
The third, and final, Downside Scenario suggests a 1930s-style depression in the West, combining Eurozone implosion with currency wars and geopolitical tension and unrest.
Insurance and financial services contribute to these future developments by helping to promote growth, ensure sustainable public spending and mitigate political risks. And, concurrently, their development of competent and ethical professional practices help to balance the uncertainties of the future; providing sound advice in the face of increased risk and securing consumer trust and confidence.
Ben Franklin, CII policy and research coordinator and author of the report, said “The next hundred years may well be just as dynamic and challenging as the last. In response, insurance and financial services professionals must remain one step ahead to provide credible courses of action in the face of numerous interlinked and complex risks. By planning for the long term and questioning assumptions about what the future might look like, the profession will be well-placed to provide the expertise necessary to navigate the potential hazards that lie ahead.”
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