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“What are the icebergs?” asked a director. He continued, “What are the risks we think we understand but are much, much larger than they appear? How do we get our arms around those?”  Another director said that discussions of emerging risks evoke an image of a canoeist floating gently down a river, having no idea that waterfalls are up ahead. Over the last several years, the introduction of regulatory risk requirements such as the Own Risk and Solvency Assessment (ORSA) and the “forward-looking assessment of risk” for Solvency II, combined with the evolution of enterprise risk management (ERM), have led to a significant maturation of risk management and governance within the most complex insurers. Despite this progress, boards still wonder if they are prepared to spot the next big challenge, especially in a world where risks seem to multiply exponentially. As one director said, “The future will only have more volatility, uncertainty, complexity, and ambiguity.  The board and management must be ready for that.” 

On June 11, 2015, Insurance Governance Leadership Network (IGLN) participants met in New York to discuss risk identification and management and to explore the most significant emerging risks. For a list of meeting participants, see Appendix 1. Meeting participants cited risks that have surfaced in previous meetings of the network—changing regulation, cybersecurity, and macroeconomic disruption—but confirmed that boards and top executives are thinking about these risks, and risk in general, in new ways. This ViewPoints is guided by the following questions:  

• How can boards enhance the governance of emerging risks?

• Which emerging risks are most likely to materialize and cause significant harm?