Spotting Potential Hazards on the Horizon

Gathering the insights of risk managers about current and potential hazards helps researchers identify and compile risk trends that extend longer than the typical planning horizon in the insurance industry. The Society of Actuaries (SOA) Research Institute and the Casualty Actuarial Society (CAS) sponsored the survey, which was conducted in November 2024, and the key findings report was published in January 2025. The annual online questionnaire, now in its 18^th iteration, asks risk managers to rank current and emerging risks, providing the data for researchers to track those rankings over time.

David Schraub, FSA, CERA, MAAA, AQ, and Max Rudolph, FSA, CERA, CFA, MAAA, co-authored the report. The SOA recently caught up with Schraub to talk about the survey and its latest findings.

Why should actuaries pay attention to emerging risks?

David Schraub: Actuaries and risk managers need to look ahead. Even if they’re not formally part of risk management, the Own Risk and Solvency Assessment (ORSA) process, or the Emerging Risk Management (ERM) function, they need to understand the shifts and dynamics of their company’s and industry’s environments to fulfill their actuarial duties. Therefore, becoming familiar with emerging risk trends is an important aspect of risk management.

How can readers put the findings from the survey to use?

David: In general, the findings from the survey can help actuaries develop foresight by building from historical data and informing ERM professionals within the insurance industry on currently relevant risks. For example, this year we focused on artificial intelligence (AI), and we uncovered how risk managers and actuaries view AI and the risks it presents.

It gives readers a broader view that encompasses geopolitical, societal and environmental factors and encourages both the survey respondents and the reader of the findings to take a step back and really see the macro view and trends.

Insurance companies can use the findings to start their ORSAs and other risk management activities. In 2022, the SOA published a user’s guide to give actuaries insights on how to utilize the information available in the Emerging Risks Survey reports.

How is this risk survey different from others?

David: It’s the longevity of the Emerging Risk Survey from the SOA Research Institute and the CAS that makes it unique. We’ve done it 18 times now, and as a result, we can see the trends of the responses to the questions we ask, year after year.

Also, because this is a relatively long survey, it takes time to fill out and this encourages respondents to put thought into their answers. They can articulate their thoughts and ideas on risk management perspectives in the comments, which lends a richness to the data. And many of the same people take this survey year after year. For example, about 50% of the respondents to the latest survey had participated in previous years. So, this means more experienced people are taking the survey again and again, which gives strength to the trends we see over the years.

What are some of the notable findings this year?

David: The Emerging Risk Survey, from the SOA Research Institute and CAS, asks about risk in four different ways:

1. Top current risk
2. Top 5 emerging risks
3. Top emerging risk
4. Top emerging risk combinations

War/civil war was the top current risk chosen in 2024. However, this risk spiked in 2023, probably because of the conflicts in Ukraine and Israel.  While it is the top current risk, it has gone down a bit in the ranking of emerging risks.

Climate change stands as the top emerging risk in the 18^th survey and now seems to be well-established, having ranked among the top five since at least 2021. Disruptive technology also continues to rank high as an emerging risk.

One way we analyze responses is to group risks into broad categories—economic, environmental, geopolitical, societal and technological—and monitor how each category evolves over time. The multiyear trend for economic risks is resolutely downward, while the recent multiyear trend for geopolitical risks is moving upward. Furthermore, for years there was an increasing trend for environmental risks, and it has now stabilized at an above-average level. And societal and technological categories remain at the levels they’ve shown over recent years.

Additionally, the topic du jour is artificial intelligence (AI), and AI risks impact many departments in an organization, unlike other risks that often affect only one or two. We asked respondents to rank sub-risks within the AI risk category. Cybersecurity ranked as the top AI sub-risk, and manipulation, such as deepfakes, ranked second.

What other tools or information are available with the 18th Annual Emerging Risk Survey?

David: As in past years, a data visualization tool is available to help readers digest survey findings. Additionally, researchers will survey risk managers mid-year. Since 2022, a mid-year flash survey has been done to offer different data points to capture risk managers’ perceptions of quickly changing environments. Also, a mid-year flash survey can mitigate the possibility of responses being overly influenced by recent events, a phenomenon known as recency bias.

Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries or the respective authors’ employers.

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