World Economic Forum report: Building a More Resilient and Sustainable World

In light of the significant impact of the COVID-19 pandemic, the World Economic Forum has created a platform to convene insurers and asset managers with the aim of supporting the industry’s response to the pandemic as well as defining the means by which to best support wider societal efforts to recover from the effects of future catastrophic events – whether related to pandemics, climate change, cyberattacks or other risks.

The backdrop to which the Forum has held these discussions has been a stark reminder of the capacity of catastrophic shocks to disrupt the global economy, and the tendency for these shocks to reveal gaps in our preparation and mitigation strategies that put households, businesses and governments around the world in a precarious position in their aftermath. In many ways, the COVID-19 pandemic is not a complete outlier. Catastrophic risk events occur far more frequently than is commonly assumed, with two “once-in-a-generation” events having taken place in just the past 20 years alone. Concurrently, the global insurance protection gap – the difference between insured losses and economic losses – had already climbed to more than $1 trillion globally before the current pandemic – and it continues to grow year after year. Overall, the current model by which society manages catastrophic perils is unsustainable. Ahead of the next crisis, it has become clear that we cannot operate with the same assumptions that defined our response to COVID-19.

Building greater resiliency is therefore a defining mandate of our time. This document represents a statement of intent from the members of the Forum’s insurance and asset management industry community to drive an ambitious resiliency agenda for the future, and a call to action for the insurance and asset management industries to play a central role in driving efforts to encourage a multistakeholder, multiyear dialogue on how economic and social models must evolve to ensure our societies confront the next major crisis on a sounder footing.

Underpinning this commitment is an action plan identifying a short list of important societal challenges and a potential set of actions the insurance and asset management industry might take to help address them – both individually and in partnership with the public sector. These actions are organized around two pillars where we suggest a new approach: constructing a new “societal risk compact” that redefines how stakeholders work together to plan for, and mitigate against, catastrophic risk; and developing a common language to discuss and justify investment in resiliency that places it at the heart of long-term shareholder value creation rather than viewing it as a short-term expense that must be justified to investors and regulators.

These two agendas are complex to deliver against and it will require sustained dialogue to get it right. Insurers and asset managers have a central role to play, but they will not achieve any progress alone. As the International Organization for Public-Private Cooperation, the World Economic Forum will continue to provide a platform that can amplify the message, coordinate efforts, integrate and advance thinking, and drive global implementation of the proposals set out in this document. But we recognize that myriad discussions are taking place in other fora around the globe on several of these topics already. It is our hope that we can join the efforts with these organizations and institutions to collectively build a more resilient and sustainable future for the post-COVID world

Find the full report here.