What a new world of polycrisis means for risk

“Everything Everywhere All at Once” isn’t just the title of an Oscar-winning film. It perfectly describes our future for risk. The exponential nature of a polycrisis — from climate change to geopolitical instability to cybersecurity risks — stands out in AXA’s annual Future Risks Report. Florian Richard, chief risk officer at AXA XL, Americas, the property and casualty and specialty risk division of AXA, explains the complex picture and what it means for our future.

Kate MacArthur: What are some notable changes in risk that could shape the future?

Florian Richard: Our survey population is worried about climate change. Just like last year, it's in the top three. And for the first time, it occupies the top spot for most regions, but not the U.S. What I found fascinating about preparing the data was the fact that the U.S. specifically, unlike other regions, has seen a change at the top of the ranking. We've slightly updated the definition of cybersecurity risks by including war. That was what made it move to the top.

MacArthur: How do complex risks influence decision-making in a polycrisis environment?

Richard: For any corporation, whether in insurance or not, the emerging risk identification framework is critical because you need to stay ahead of these risks. When you look at what's driving the Top 10 here, it's climate, cyber, geopolitics.

You need to have a plan to prevent and mitigate these, and a clear majority of the people in the survey say that society cannot progress without taking risks. We need to think about it this way instead of avoiding it, which is probably impossible at this stage. Anything you can do to prevent and mitigate is probably the best way to look at this.

MacArthur: Could you discuss the impact of the numerous global elections this year?

Richard: I can’t stress enough how big of a factor it is, because it’s 70 countries, almost half the world population. We haven't had this in the past few decades, and we're not going to have one again in the years to come. It's a unique year from that perspective and in the context of what we’ve seen over the past couple of years in the war in Ukraine, the increasing tensions in the Middle East. The world is looking closely at the tensions between these countries.

MacArthur: How might AI evolve as a future risk?

Richard: It's a risk and opportunity. The key word here is amplifier. AI is an amplifier to already-existing risks. It’s the risk that keeps evolving. Cyber five years ago was a different challenge than it is right now, and probably will look completely different in five years’ time.

“The key word here is amplifier. AI is an amplifier to already-existing risks. It’s the risk that keeps evolving.”

MacArthur: How will you monitor that?

Richard: AXA created our own Center of Expertise just for cyber because we understood how important it was to wrap our heads around this as an organization and for our clients going beyond cyber insurance. But also understanding how to explain how the risk is evolving through an actual cyber-specific risk consulting group.

MacArthur: Who should be responsible for educating the public and leaders about tech, data and AI?

Richard: It's important to stay connected, to have that communication channel between companies within the same industry, and between companies and the public sector. It's just a matter of time until this translates into action, both from our perspective as private companies, as well as political decision-makers. And having a clear stance on how to think about these risks, how to prevent them, and how to stay on top of the headwinds coming our way.

MacArthur: Who should be responsible for reducing the risk of climate change?

Richard: Global solutions are required here to effectively address this risk. We need transversal solutions involving corporations, but also the public sector. If you look at the report, there are three key actions suggested: One is regulation, including sanctions. Education, raising awareness to increase stakeholder engagement is key. Then protecting infrastructure and investing where we should to make sure that we're tackling this head on.

For further reading

• AXA Future Risks Report 2023: A World in Polycrisis
• A New World Disorder: Opportunity in a Polycrisis
• Ipsos Top Topics: The Economy