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Emerging risks: welcome to the unknown

There are three categories of risks. Known risks, which are recognised and measurable. New risks, which are uncharted territory but can sometimes be insured through modelling or due to their resemblance with other recognised risks. And finally, there are development risks. By their very nature, they cannot be detected before they occur. Development risks include a sub-category of risks that have been identified but remain obscure: emerging risks.

Emerging risks: welcome to the unknown

Unknown but anticipated risks  

In general, risks mutate like viruses. They develop naturally according to the following pattern: after starting out as unknown risks, they develop into emerging risks and then new risks before finally becoming known risks. The nuclear risk is an example of this process. After the Chernobyl (estimated cost: $700 billion) and Fukushima (cost to date: €87 billion) disasters, this risk left the emerging category to join the new risk category. The same applies to terrorism, a new risk whose overall cost – beyond the inflicted human suffering – is hard to determine.

But we know nothing about emerging risks: their dangerousness, their consequences, or the frequency at which they occur. Their existence may be suspected and studied, but the lack of scientific certainty means there is a lack of history and modelling. This makes them uninsurable.

Consequently, anticipating emerging risks has become one of the biggest challenges facing the public authorities and insurers, which are already deliberating over the resources and specific rules required for their compensation.

Certain emerging risks have been identified and classified according to their presumed intensity, the periods at which they occur and the areas they may affect. Examples include risks relating to the use of digital technologies, to health, new consumption habits, pollution and climate change, etc.*

Risk mutation – a complex process: the Distilbène case

Distilbène (a trade name for the molecule Diethylstilbestrol) is a synthetic oestrogen created in 1950 and administered to pregnant women at that time in order to prevent miscarriages. In 1971, the risk took on emerging characteristics when an American doctor suspected the existence of a link between the clear-cell adenocarcinomas from which seven young patients were suffering and the Distilbène treatment administered to their mothers during their pregnancies 20 years earlier. In 1975, any doubts were dispelled and the risk metamorphosed from "emerging" to "new" but remained impossible to measure accurately. Anomalies were found in many young women referred to as "Distilbène children". At the time, the process was thought to have run its course and its costs began to be measured. But in the 2010s, the risk spiralled out of control again when several grandchildren of women treated nearly 60 years before also started to exhibit serious health problems to which Distilbène may have contributed. For how many generations more will this risk remain? The risk has escaped our control once again.

The characteristics of emerging risks:
1.There is a high degree of uncertainty about the nature of the feared effects and the relationship between the level of the danger and its consequences;
2.Determining their frequency proves to be impossible or highly uncertain.
3.It is hard to provide information about these risks due to the uncertainty surrounding them. This lack of information breeds myths, controversy and suspicion.
4.These risks are usually of a global (nanotechnology, GMOs, etc.) or serial (health) nature.
5.There is or may be a high degree of uncertainty regarding the type of goods, property or targets to be covered.


* Swiss Re Sonar : New emerging risk insights (May 2016)

Source:  Introduction à la notion de risque - Focus sur le risque émergent by Jean Vilanova, a jurist and consultant for La Médicale, a subsidiary of Crédit Agricole Assurances

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