Swiss Re's SONAR Report: Emerging Risks to Infrastructure, Supply Chains

Swiss Re's 2024 SONAR report identifies 16 emerging risks that could significantly impact the insurance sector and broader society. Key risks include the cascading effects of natural disasters, weakening supply chain resilience, and the repercussions of persistent underfunding in healthcare systems.

The report emphasizes that the compounding effects of natural catastrophes on critical infrastructure and supply chains can lead to substantial loss accumulation. Floods, wildfires, and storms not only cause direct property damage but also disrupt essential services. For instance, wildfires can contaminate water sources, while floods and storms can damage energy grids and halt transport networks, leading to production delays and spoilage of materials. 

The resilience of supply chains has decreased since the COVID-19 pandemic, as companies have reverted to prioritizing immediate cost savings over long-term security. This shift, coupled with geopolitical instability, economic uncertainty, and heightened cyber risks, has increased the vulnerability of global supply routes. The report highlights the Red Sea crisis as an example of the increased risks to supply chains.

Healthcare infrastructure is also under threat from climate change and supply chain issues, compounded by chronic underfunding. Extreme weather events can compromise essential services like water and electricity, exacerbating healthcare challenges. Weakened health services increase morbidity and mortality rates, negatively impacting economies through higher health-related absenteeism and understaffing. 

Patrick Raaflaub, Swiss Re Group chief risk officer, said, "We live in a world characterized by interconnected crises, which in turn can give rise to new risks. For reinsurers, it is key to anticipate trends and understand how major global issues such as climate change, economic uncertainty, or geopolitical turmoil could impact not only the industry but also society as a whole."

Swiss Re will host a special hybrid event on June 17 to discuss the SONAR 2024 report and its insights into emerging risks.