Greater connectivity and technology are intensifying global risks and contributing to the world’s current state of volatility, Jacob Rosengarten, Chief Enterprise Risk Officer for XL Group plc (“XL”)(NYSE: XL) told attendees at today’s European Insurance Forum (EIF). Mr. Rosengarten delivered a keynote address at this year’s Forum, which gathered 200 insurance and business leaders to discuss pressing global risk management issues.
“Many of today’s most pressing global risk management issues are intertwined,” Mr. Rosengarten said. “They are correlated in one way or another, especially in their potential and significant impact on the insurance industry and the businesses we serve.” Mr. Rosengarten identified five global megatrends that can pose significant future risk to insurers and businesses alike.
- Weakness in the West: “Economic weakness in the West persists,” noted Mr. Rosengarten. “While the US and other Western military powers are cutting military spending, others are building up,” noted Mr. Rosengarten. “Add to these concerns the consequences of significant youth unemployment rates in both developed and emerging economies which contribute to a younger generation that feels alienated from key institutions.”
- Growing Nationalism and Separatist Movements: “Whether it’s economic weakness, youth unemployment or other issues, failed global institutions can cause societies to turn inward, and nationalistic, in a ‘romantic’ desire to recapture some notion of historical greatness,” said Mr. Rosengarten. “The result – political unrest and instability.”
- Urbanization: “More of us are living closer together,” Mr. Rosengarten said, noting that half the world’s people live in cities. “Social disparities become very noticeable. Plus, greater numbers of people can find themselves more vulnerable to natural and man-made disasters and greater risk of health issues caused by concentrations of people,” he commented. “This also creates risks associated with weaknesses in governance over delivery of key services, infrastructure degradation, and pollution conditions.”
- Rise of developing markets: “Instability in developing markets that once seemed unrelated to developed markets are now becoming more prominent, especially where supply chain risk is concerned,” said Mr. Rosengarten. “Developing markets are playing a larger role in producing items (like computer chips) that developed markets need and any disruption, has a global ripple effect.”
- Technological revolution: “Technology has made this world much, much smaller,” said Mr. Rosengarten. “Technology, particularly social media, has played a significant role in the instability of some developing markets. Social media makes it possible for small and oppressed groups to mobilize rapidly and take action in a way that wasn’t possible years ago.”
About Jacob Rosengarten
Jacob Rosengarten joined XL Group in 2008. He is the chairman of the Enterprise Risk Committee and is responsible for identifying, assessing, monitoring and reporting key risks across XL Group companies.
From 1998 to 2008, Jacob served as Managing Director of Risk Management and Analytics for Goldman Sachs Asset Management (GSAM). From 1983 to 1997 he held progressively senior positions at Commodities Corporation (now GSAM's Hedge Fund Strategies Unit), including Director of Accounting, Assistant Controller, Controller and Director of Risk and Quantitative Analysis. Jacob began his career in 1979 as an auditor at Arthur Young & Company. Jacob is a CPA and holds an MBA from the University of Chicago and a Bachelor of Arts degree from Brandeis University.
About XL Group plc
XL Group plc (NYSE:XL), through its subsidiaries, is a global insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises throughout the world. XL is the company clients look to for answers to their most complex risks and to help move their world forward. To learn more, visit www.xlgroup.com