Cyber, Climate Change and Space Highlighted as Critical Emerging Risks in Guy Carpenter Report

New York, NY (Sept. 10, 2013) – Guy Carpenter & Company, LLC, the leading global risk and
reinsurance specialist and member of Marsh & McLennan Companies, has
published a new report highlighting emerging risks facing the (re)insurance sector, including cyber
risk, climate change and space risk. The report seeks to identify pressing emerging risks confronting
the sector, as well as analyze their implications on businesses and (re)insurers.

“It is critical that (re)insurers are prepared to anticipate and react to a rapidly-changing and uncertain
risk landscape,” said David Flandro, Global Head of Business Intelligence for Guy Carpenter. “We
are observing the rise of many new risks as technological, economic and scientific advancements
are made, meaning there is often precious little historical data available for modelers and
underwriters to utilize. Only by analyzing and seeking to better understand these risks can we
mitigate the element of surprise posed by emerging risks and identify potential growth opportunities.”

Cyber Risk

Rapidly-developing computer technology and the unrelenting evolution of cyber risks presents one of
the biggest challenges to the (re)insurance sector today. Liabilities from cyber attacks and threats to
the data security of cloud computing and social media have become significant emerging risks for
carriers. Instances of cyber attacks are indeed on the rise and have reached alarming levels.
Moreover, cyber risks are not isolated and are usually connected to other seemingly less obvious
risks. For example, the immediate risks associated with a cyber attack can range from legal liability
and computer security breaches, to privacy breaches of confidential information. Reputational
damage is another concern.

A company may also be vulnerable to risks to their supply chain as a result of cyber threats, as
technology has become a critical enabler of a supply chain’s operations. According to the report,
technology failure and cyber attacks represent a greater threat to most organizations than adverse
weather, fire and social unrest combined. Given the growing loss potential from supply-chain risks,
companies need to ensure they understand their supply chains and offer all data to their insurers.

Every company that utilizes technology and collects or handles data should therefore consider cyber
insurance cover. The (re)insurance sector has reacted quickly to cyber developments and now offers
coverage that addresses nearly all aspects of technology-based risk faced by modern companies.

Climate Change Risk

Climate change, global warming and the resulting landscape shift for meteorological perils is a
growing area of concern for the (re)insurance sector. Based on consistent and scientifically
defensible evidence, the Intergovernmental Panel on Climate Change (IPCC), a United Nations body
for the assessment of climate change, has concluded that global warming over the last 50 years
cannot be explained without “external radiative forcing.”

The most pervasive hazard of global warming is coastal flooding. According to the IPCC, a sea-level
rise of at least 25 to 50 centimeters is expected by the end of the century. This is obviously of great
significance for coastal cities. In addition, many inland areas of the world prone to flood face an
increasing threat due to global warming. Global warming is also impacting drought and wildfire
patterns around the world, according to the IPCC. Areas that see diminished precipitation will face
water shortages, while other areas that are supplied from glacial sources will face the same problem
to an even greater severity. Wildfires are another hazard imposed by drought conditions. In fact, the
IPCC has noted that the wildfire season in western regions of the United States has increased by
about 78 days in the last three decades.

Global warming potentially poses a serious threat to (re)insurers, with implications on catastrophe
risk perception, pricing and modeling assumptions. Investing in solutions that help predict the likely
effects of global warming on the location, intensity and cost of weather-related catastrophes will be
critical to acquiring a better understanding of climate change risk.

Space Risk

There are two primary and significant risks that emanate from space — space debris and solar storm
activity. Both have the potential to cause significant disruption to communities and businesses
around the world and can trigger significant losses for (re)insurers.

The most serious threat to high-value satellites and space infrastructures in the Earth’s orbit today is
the risk of collision with other satellites or space debris. As more satellites are sent into the Earth’s
orbit to provide vital services and technology, such as global communications, air traffic control,
weather forecasting and disaster management, the area is becoming increasingly cluttered. While
the cost of insuring a satellite during launch has traditionally been higher than the cost to cover its life
in orbit, this is likely to change as underwriters become increasingly aware of increased collision risk.

Solar weather is another space-related risk that has the potential to cause huge disruption to
infrastructure and businesses around the world. Technological advancements and an increasingly
interconnected global economy have resulted in vulnerability in this regard. Major solar disturbances
have the potential to cause significant losses as they can severely disrupt electricity supply, cause
satellite damage and trigger GPS signal disturbance. The cascading impact of this would cripple
critical infrastructure, including transportation and fuel supplies, and global supply chains would likely
fail. The effect on the (re)insurance sector would also likely be profound, affecting several lines of

Other Risks

Emerging risks are of course not only confined to the threats emanating from cyber, climate change
and space. “The emerging risk landscape is vast, with threats ranging from pandemics to
nanotechnology,” said Flandro. “Others are yet to surface. Companies are consequently seeking
advice and guidance in attempting to identify and measure future risks. Guy Carpenter and Marsh
are assisting risk carriers in meeting these challenges.”

The full report, Tomorrow Never Knows, is available for
download at

About Guy Carpenter

Guy Carpenter & Company, LLC is a global leader in providing risk and reinsurance intermediary services. With
over 50 offices worldwide, Guy Carpenter creates and executes reinsurance solutions and delivers capital
market solutions* for clients across the globe. The firm’s full breadth of services includes line-of-business
expertise in agriculture; aviation; casualty clash; construction and engineering; excess and umbrella; life,
accident and health; marine and energy; medical professional liability; political risk and trade credit;
professional liability; property; retrocessional reinsurance; surety; terrorism and workers compensation. GC
Fac® is Guy Carpenter’s dedicated global facultative reinsurance unit that provides placement strategies,
timely market access and centralized management of facultative reinsurance solutions. In addition, GC
Analytics®** utilizes industry-leading quantitative skills and modeling tools that optimize the reinsurance
decision-making process and help make the firm’s clients more successful. For more information, visit

Reactions magazine named Guy Carpenter Best Global Reinsurance Broking Company Overall and Best
Reinsurance Broking CEO of the year in 2012. At the Reactions London Market Awards, Guy Carpenter was
also named Reinsurance Broker of the Year and took home Reinsurance Broking Team of the Year honors
for both Property and Aviation. In the past year, Guy Carpenter has also won: Global Best ILS Advisor (GC
Securities*), US Best ILS Advisor (GC Securities*) and US Best Broker for Casualty Reinsurance from
Intelligent Insurer, Insurance Day‘s 2012 ILS Transaction of the Year (GC Securities*), and Reinsurance
Broker of the Year for the Asia-Pacific region at the 16th Annual Asia Insurance Industry Awards.

Guy Carpenter is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of
professional services companies offering clients advice and solutions in the areas of risk, strategy and human
capital. With 53,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan
Companies is also the parent company of Marsh, a global leader in insurance broking and risk management;
Mercer, a global leader in talent, health, retirement, and investment consulting; and Oliver Wyman, a global
leader in management consulting.

*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US
registered broker-dealer and member FINRA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000.
Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe)
Ltd., which is authorized and regulated by the Financial Services Authority. Reinsurance products are placed through qualified affiliates of
Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates
owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any
security, financial instrument, reinsurance or insurance product. **GC Analytics is a registered mark with the U.S. Patent and Trademark

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