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March 18, 2022

Industry Challenge

How to Address Political Frictions When They Affect Your Business

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What: As political frictions inside and among regions heat up, the likelihood increases that they will affect a global enterprise’s operations, performance, or people. So how should companies handle these risks? McKinsey focused on 5 key areas: (1) bring it to the Board, (2) use a trifocal lens to assess potential risks, (3) think critically about the corporate narrative, and (4) deploy refreshed risk frameworks and guidelines, and (5) secure stakeholders’ hearts and minds. 

Why it matters: With the world becoming more international, companies are encountering new risks they haven’t previously confronted. These challenges are very real and need to be taken into account when pricing risk.

Read: How global companies can manage geopolitical risk | McKinsey

Industry Challenge

The Global BlackRock Geopolitical Risk Indicator is at its Highest Level in More Than a Year

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What: The global BlackRock Geopolitical Risk Indicator, which aims to quantify the market’s attention to geopolitical risks, spiked to its highest level in more than a year. This is driven by elevated market attention to conflict-related risks across the board – most notably, Russia-NATO conflict.

Why it matters: Markets hate instability, and already-high insurance prices are likely to continue their upward trend. Understanding how the market is thinking about these challenges helps insurers better price risk. 

Read: Geopolitical Risk Dashboard | BlackRock Investment Institute

Industry Challenge​

Avatar Becomes the 6th Florida Insurer to Face Insolvency in the Past 30 Months

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What: In what some insurance industry leaders are calling a meltdown for Florida’s property and casualty insurance market, Avatar became the second Florida insurer to face insolvency this year and the 6th in the past 30 months. 

Why it matters: It’s tough to price the risk in Florida because there’s a highly variable and skewed risk profile. For years companies can have great loss ratios, but major events cause losses that can end the companies that didn’t set prices appropriately.

Read: 10 Emerging Risks to Watch

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