Climate change - physical risks
Increased frequency and severity of natural events resulting from climate change. Physical risks are those resulting from the physical effects of climate change and include: acute physical risks which arise from specific events, especially meteorological events such as storms, floods, fires or heat waves; and chronic physical risks which arise from climate change in the long term, such as temperature changes or rising sea levels.
Climate change - transition risks
The transition to a low-emission economy entails risks of various kinds: regulatory, due to political decisions that encourage decarbonisation; legal, due to legal disputes arising from climate-impacting activities; technological, due the introduction of new low-emission and energy-efficient technologies; changing market preferences, due to changes in customer behaviour and consumer preferences; and reputational, due to the difficulty of attracting and retaining stakeholders in the case of companies that damage the environment.
Biodiversity loss
This includes physical risks resulting from the degradation of species richness and the collapse of natural ecosystems (terrestrial and aquatic – marine and freshwater) with significant impacts on ecosystem services, human health and psychophysical wellbeing, food security and the long-term profitability of economic activities. These risks can be acute, if caused in the short term by specific events, or chronic, if the changes in nature occur gradually. It also includes risks arising from the transition to a “nature-positive” economy, including regulatory, technological, market preference, and litigation changes, as well as systemic risks arising from the destabilisation of a critical ecosystem or an entire financial system due to the combined manifestation of physical and transition risks.
Environmental pollution
The increased contamination or disruption of environmental and natural homeostasis through the introduction of environmentally harmful materials or actions. There are different forms of environmental pollution, which can be distinguished based on the affected environment (air, water, soil) or the source (e.g., light, noise, plastic pollution). All forms of pollution have implications for human health, nature and biodiversity.
Public debt crisis
Public Debt Crisis refers to the risk that a country may be unable to sustain its debt due to economic policies that are unsuitable to address the reference context.
Supply chain disruptions
The risk of an increase in the price of critical raw materials and energy, also linked to the possible escalation of conflicts, which could generate inflationary pressures with impacts on supply chain costs, claims costs and dynamics, as well as the potential effects on economic growth also due to a greater concentration of risks and disruptions caused by the increased efficiency and interconnectivity of global supply chains.
Emerging infectious diseases
The risk of emerging infectious diseases caused by new forms of pathogens, aggravated by growing drug and antibiotic resistance, the effects of climate change and biodiversity loss, with potential pandemics due to new opportunities for pathogen to spread through international trade and travel networks.
Demographic changes
The risk of changes in the size, composition and territorial distribution of the population due to factors such as birth rate, mortality rate, social mobility and territorial movement. This leads to the unsustainability of business models also as a result of the emergence of new insurance needs that differ among contemporary generations with exposure to longevity risk and changing social relationship patterns, a significant increase in life expectancy with impacts on the sustainability of the risk assumed also due to the high rate of illness among older segments of the population, and an impact on personnel management in terms of attracting and retaining new skills.
Mental Health
Mental health risks are linked to the increasing prevalence of mental disorders and psychophysical illnesses that can limit an individual’s ability to perform daily activities. Environmental factors such as pollution and biodiversity loss, along with use of technology, stress and isolation, worsen these problems, promoting the onset of metabolic diseases and substance addiction.
Geopolitical instability
Geopolitical instability risks include wars between states, also involving weapons of mass destruction, terrorist attacks, and internal socio-political tensions. They also include economic conflicts that leverage trade policies or other tools such as cyber attacks against critical infrastructure. Alliances, polarisation and other political dynamics that can influence the geopolitical landscape must also be considered.
Increasing polarisation and social tensions
Violent social conflict: phenomena of social anger and instability due to the proliferation of social polarisation (between generations, between genders, economically and financially, or in terms of skills and opportunities) and the increase in the number of people living in poverty. The failure to address financial inclusion, i.e. the ability to make products and services accessible, understandable and financially sustainable for all segments of the population.
Cyber risk & Cyber insecurity
The intentional or accidental compromise of the confidentiality, integrity or availability of data, information and/or information systems with potential negative impacts on organisational operations, assets, individuals, other organisations or the nation. Individuals and families are also exposed to cybersecurity risks that can cause the loss, theft or fraudulent disclosure of personal and sensitive information, potentially resulting in image, reputational, financial, psychological or legal damage to victims. The rise and transformation of cyber risk is linked to the evolution of technology, its pervasiveness, and the growing level of dependence in various fields, with social implications as well.
Critical infrastructures breakdown
The collapse of infrastructure such as the power grid, water supply, transportation infrastructure, GPS or IT systems due to: human activity (e.g., cyberattacks; geopolitical conflicts); natural disaster (earthquake or flood); or cosmic threat (e.g., solar storm). Critical infrastructure failures tend to have a significant and consequential ripple effect, resulting in business closures, economic losses, cleanup costs, health risks and environmental impacts.
Artificial Intelligence
The possibility of incurring potential losses arising from the use of artificial intelligence due to both (i) the technological perspective relating to the issues of confidentiality, data and input inaccuracy and security, transparency of AI algorithms and abuse of AI models, and excessive dependence on and reliability of the models for activities and outputs; and (ii) the economic, social and environmental perspective that includes “People and Planet” (changes in the world of work, governance, data ethics, litigation and threats to environmental sustainability) and the economic context (loss of strategic advantage, changes to the supply chain and systemic implications).
Space risk
Potential threats arising from physical events of cosmic origin, such as the impacts of meteor showers, solar storms and other magnetic and mechanical effects that can directly undermine the integrity of space and/or terrestrial infrastructures relied on for critical services on Earth including communications, defence, GPS, oil & gas pipeline systems, or arising from the growing interest of private companies in space tourism and the creation of mega-constellations of microsatellites with the associated risk of collision with space debris.
