10th Risk Summit (2019)

Abstract

An overview of the research work carried out by Cambridge Centre for Risk Studies for the risk class of Financial and Economic Risk, and description of a possible landscape of the risk over the next decade.

View Ken's presentation

Abstract

This paper builds upon the research on the history of financial crises that Duncan Needham and colleagues at the Centre for Financial History have carried out with the Centre for Risk Studies.  It draws themes from twelve case studies stretching from the South Sea Bubble to the Global Financial Crisis.  In the less ‘financialised’ 18th and 19th centuries, banking crises were frequent but tended to have shorter-term impact on the real economy.  Following the Great Depression, governments were more willing to intervene to smooth out smaller disturbances. This had the effect of making financial crises less frequent, but more consequential.  Since the 1970s, however, financial crises have become both more frequent and more consequential.  This is partly the consequence of fundamental changes within western banking, particularly the growth of liability management, greater maturity transformation and increased balance sheet exposure to real estate markets.  We analyse some of these changes, with particular emphasis on the United Kingdom.  We conclude that, while the next major financial crisis may well bubble up in China, for instance, it will likely bear the hallmarks of recent financial crises in the west ie less-regulated financial institutions reliant on short-term wholesale funding finding themselves over-exposed to declining real estate values.

View Duncan's presentation

Abstract

Financial risk management is going through a major process of transition. This presentation focuses on three key themes.  First, it is becoming increasingly important to consider non-financial risks in the context of financial risk management. Second, digitalization creates opportunities to manage financial risk more efficiently, but also introduces new risks. Third, risk management needs to take into account the commercial risks to a financial firm’s future profitability and viability, in addition to the “traditional” risks.

The presentation will be based on a practitioner’s perspective and offers real life examples.

View Alessandra's presentation

Abstract

An overview of the research work carried out by Cambridge Centre for Risk Studies for the risk class of Geopolitical and Security Risk, and description of a possible landscape of the risk over the next decade.

View Tamara's presentation

Abstract

A core function of the MOD is to be able to anticipate the type, nature and loci of future conflict. There are numerous technological, societal, political, economic and environmental factors that initiate conflicts. Although, the number of deaths resulting from conflicts and the incidences of large conflicts are in decline, the frequency and variation in the types and forms of conflicts has been increasing since 1946. This poses considerable dilemma about how to prepare for future conflict.

Traditionally the Defence Community has tended to make predictions or intuitively know where future conflict will be, this approach is both struggling to understand what future conflict might be – due to the complexity and uncertainty of the modern world – and is being increasingly scrutinised and questioned.

In this presentation we highlight some of the more varied and complex set of risks and challenges we face. In trying to tackle these risks, the challenge not only lies in the understanding and prioritising future conflict risk, but – that within a highly conservative institution – one of the most fundamental barriers is engaging with senior decisions makers to adopt new ways of thinking so that they can understand.  The need to adopt to this new culture is set against the backdrop of defence capability development which is becoming increasingly expensive.

View Jim's presentation

Abstract

What are the current technologies for managing supply changes, and challenges come with adopting new these methods in post-rationalisation to disruptive events? This presentation will discuss some of the new supply chain threats that will emerge and need to be evaluated in terms of the geopolitical issues and the disruption and reputational impacts that could arise. It will also outline the future solutions that will exist in the agile and evolving supply chains of the future, often referred to as Supply Chain 4.0 and the new risk landscape.

View Nick's presentation

Abstract

An overview of the research work carried out by Cambridge Centre for Risk Studies for the risk class of Technology Risks, and description of a possible landscape of the risk over the next decade.

View Kelly's presentation

Abstract

New research by the McKinsey Global Institute (MGI) shows how good digital identification (digital ID) is a new frontier in value creation for individuals and institutions around the world.  Nearly one billion people globally lack a legally recognized form of identification. The rest of the world’s 6.6 billion people either have some form of identification but limited access to services that increasingly are being provided online, or they are active online but struggle to keep track of their digital footprint securely and efficiently.

Individuals can use digital identification, or “digital ID,” to be verified unambiguously through a digital channel, unlocking access to banking, government benefits, education, and many other critical services.  The research finds that countries implementing digital ID could unlock value equivalent to 3 to 13% of GDP by 2030. The magnitude of this opportunity heightens the imperative for understanding and managing the very real risks and potential for misuse of digital ID.  Olivia White, a Partner in McKinsey & Company’s San Francisco office and co-author of the recent MGI report Digital identification:  A key to inclusive growth will talk about the enormous potential of digital identification and how careful system design and well-considered government policies are needed to promote adoption and manage associated risks.

View Olivia's presentation

Abstract

Cyber risk is changing all the time. Recent years have seen shifts in the business models and techniques of cyber criminals – putting more of their efforts into ransomware attacks than stealing personal data – as well as changes in the security technology available, a growing political dimension to cyber attacks by one country on another, and legal and regulatory framework changes that make it more expensive for organisations to deal with their cyber events.

To help organisations manage their risk in this changing landscape, RMS updates its cyber risk model each year, with reparameterisations to incorporate new trends.

Business executives however need to plan for multiyear investments, returns on capital, and longer-term assessments of risks to their business strategies. Assessing how cyber risk will change over the next five to ten years is a challenge, but one that can be planned for and that should underpin enterprise risk management. A strategy that plans for a continuation of the current trends is likely to experience strategic surprise – a sudden change in the risk landscape for which the business will be unprepared.

Strategic surprise in cyber risk could occur with a sudden increase in the number of threat actors, or a rapid advance in their capabilities. It could occur with major technology advances such as artificial intelligence or quantum computing, rendering encryption obsolete. New methods of monetising information could be discovered by hackers, just as new businesses are trying to do in the legitimate economy. State-sponsored cyber teams could change their rules of engagement to focus on commercial targets.

A range of different possibilities needs to be considered to enable organisations to manage their cyber risk in a changing threat environment over the next decade.

View Christos' presentation

Abstract

An overview of the research work carried out by Centre for Risk Studies for the risk class of Environmental and Natural Hazard Risks, and description of a possible landscape of the risk over the next decade.

View Oliver's presentation

Abstract

In many ways climate change is the defining issue of our time. And yet, any actors still consider it to be a risk not to today or even tomorrow, but to many decades hence. They envisage the impacts of climate change only being felt well beyond their planning horizons. This was famously described by Mark Carney as the “tragedy of the horizon” – and it results in the perception of a cost on future generations that the current generation has no direct incentive to fix. In this talk I will challenge the assumption that climate risks are only relevant to the distant future. I will describe (i) physical risks manifested in substantially increased risk of extreme weather being experienced around the world today; (ii) current risks to businesses and investors associated with a transition to a zero carbon global economy, including arising from competition, regulation and market volatility; and (iii) the increasing potential for reputational damage or litigation. I will also describe the risk of catastrophic climate shocks that may arise over unknown timescales.

View Emily's presentation

Abstract

In 2018, Tesco embarked on a journey to implement the recommendations of the Task Force on Climate- related Financial Disclosures (TCFD), with the first disclosures being made in the 2019 Annual Report. This presentation provides a roadmap for the Tesco journey, highlighting the key steps undertaken and the lessons learned.

View Manjula's presentation

Abstract

An overview of the research work carried out by Centre for Risk Studies for the risk class of Societal and Sustainability Risks, and description of a possible landscape of the risk over the next decade.

View Kayla's presentation

Abstract

This presentation will explore some of the key issues related to sustainability trends that are likely to impact business and society over the next decade. These include physical impacts from extreme weather events but also more indirect impacts driven by how society responds to these global challenges.

For example we expect to see consumer shifts (such as the recent increase in interest in vegan diets), changes in societal attitudes towards power, and significant shifts in policy and investment as governments move to tackle some of the medium to long term issues. The presentation will particularly focus on how quickly some significant changes may occur especially in energy infrastructure development and consumer purchasing.

An example of scenario work developed with the insurance sector will be presented to highlight some of the current risk analysis undertaken when exploring these short term trends.

View Aled's presentation

Abstract

Pandemic influenza has remained at the top of the UK Government’s non-malicious National Risk Register for many years, with both a high likelihood of occurrence and a high impact should it occur. In this talk I will briefly review the evidence as to why pandemic flu is perceived as such a threat. In addition, I will sketch how effective different countermeasures, such as vaccination and school closures, could be. In the final part of the talk I will mention other possible infectious threats to the UK.

View John's presentation

Abstract

An overview of the research work carried out by Centre for Risk Studies for the risk class of Governance and Regulatory Risks, and description of a possible landscape of the risk over the next decade.

View Jennifer's presentation

Abstract

This presentation takes as it starting point the findings from two recently published pieces of research: firstly, the 2018 Centre for Risk Studies “Risk Management Perspectives of Global Corporations” Enterprise Risk Management survey which ranked reputation/brand as the fourth risk facing companies;  and secondly, the 2019 ReputationInc/EACD  report “The Future of Reputation Risk”.  This second report identified the effective management of future reputation risk as being the number one risk amongst respondents.

Increasing regulatory scrutiny of how boards and the C-suite are considering reputational risks is just one of the drivers forcing organisations to contemplate how best to implement reputation risk governance.

With no global standardised reputational risk framework from which to start, and with the nature of reputational risk constantly evolving and dependent on numerous influences, consideration is given to the key elements of a robust, future proof governance model.  Can such models provide the degree of flexibility required to identify, manage and mitigate emerging risks, or is a combination of governance (third and second line of defence) and subject matter expertise (first line) the sustainable way forward, whilst meeting regulatory expectations?

Today’s risk landscape is already characterised by an increasing complexity and interconnectedness. We are convinced this will become more prominent in the future.

Interconnected systems trigger the development of systemic risks. There is extensive description and characterisation of systemic risk, but few pragmatic solutions exist on how to understand, model and manage them. There is currently a lack of common agreement on how to deal with interconnected risks and cascading failures between systems. We illustrate properties of systemic risks by way of examples, eg critical infrastructures, climate change.

The development of resilience as an additional tool to cope with unexpected disruptions and systemic risks is an opportunity for risk management, both in research and its applications in corporations. Resilience is generally defined as a system’s ability to cope with unexpected, adverse events that cannot be prevented ex ante and can potentially lead to significant disruptions in its functionality. Managing resilience complements and includes risk management. They are considered two different approaches that address the unexpected threat of losses, both physical and financial, both events and trends.

Corporations will have to adapt to the new environment. Resilience-driven strategies aim at reducing the losses resulting from complexity by considering the consequences of unknown, uncertain, and unexpected events that impact systems rather than individual components. The insurance industry has always had an important part in risk management and the transfer of risk. In this presentation we demonstrate the role of insurance for strengthening resilience.

The work that will be presented is based on on-going work on systemic risks organised by the International Risk Governance Center at EPFL, and on its work for the EC funded SmartResilience Horizon 2020 project, focusing on resilience and insurance of CI.

View Rainer's presentation