Lloyd’s research into food security and safety aims to enhance industry knowledge about its impact on the risk landscape
London, UK (Nov. 7, 2013) – The CRO Forum – a group of professional risk managers from the insurance industry that focus on developing and promoting industry best practices in risk management – has published a paper on food security and safety, which considers how issues relating to food are likely to impact different lines of business. It was produced by Lloyd’s in partnership with other insurers on behalf of the CRO Forum’s Emerging Risk Initiative.
Food And Its Impact On The Risk Landscape examines how classes such as agriculture and food supply, supply chain and business interruption, food product recall and liability, environmental risk and political risks and terrorism are expected to be affected by a variety of food-related risks ranging from regulation to weather events.
“The report aims to look at the implications of food risk for the insurance industry insurance and examines the challenges for insurers involved with insuring the food industry,” explains Sandra Gonzalez, executive of Emerging Risks & Research, Lloyd’s Exposure Management.
As an emerging risk, food security has risen up the risk management agenda. In this year’s Lloyd’s Risk Index concerns over food security was up two places from 2011 to rank in 38th position out of a long list of potential threats facing global business.
To feed a population of around nine billion by 2050, food production is estimated to have to increase by 70%, putting agricultural systems under serious pressure, notes the paper. There are many risks associated with food security and food safety which could have serious ramifications for society and our global economy.
Unsafe food can cause severe and life-long diseases, while a drop in food production could be expected to affect growers, manufacturers, retailers, food-service providers and ultimately local communities and individuals. Insurers can expect to bear some of the risks triggered by food insecurity and unsafe food.
Some of the other CRO Forum members who contributed to the paper include AXA, Munich Re, Swiss Re and Zurich. Professor Michael Winter from the University of Exeter has also provided his expert view.
It follows the report Feast or Famine, published by the Lloyd’s Emerging Risk team in May this year. This report looks at issues as diverse as globalisation, water security and land availability and suggests the food sector is increasingly vulnerable to attack.
Lloyd’s joined the CRO Forum as an associate member in April 2013, having already been involved with the Forum’s Emerging Risk Initiative for over a year.
When the CRO Forum was set up in 2004 it was recognition of the elevation of risk management practices within the insurance industry and the collective power insurers can have when they come together.
It is hoped that Lloyd’s position as a thought leader and industry campaigner will be enhanced by its membership of the CRO Forum.
“The Emerging Risk Initiative is about sharing best practice and sharing knowledge. At the event hosted by the Forum at the end of September, each insurer gave a presentation on different topics, for example on driverless cars or 3D printing,” says Gonzalez.
The Forum initially comprised the senior risk officers of the key European insurance companies, and retains a distinctly European flavour, but has now broadened to encompass insurance groups from around the world. Members include ACE, AIG, Allianz, AXA, Aviva, Munich Re, RSA, SCOR and Swiss Re.
As Lloyd’s director of risk management, Sean McGovern explains the significance behind Lloyd’s decision to join this influential group, which has helped shape the agenda on issues including Solvency II, the financial crisis and emerging risks.
“I became responsible for risk management at Lloyd’s about a year ago and one of the first thoughts was that we should join the CRO Forum,” says McGovern. “We had observed its work and its very high calibre group of people, who really are thought leaders on the issue of risk management in the insurance industry.
“One of the things we’re trying to do at Lloyd’s is to drive best practices in our own insurance market,” he continues. “To enable us to do this it’s obviously very useful to understand what best practice looks like across the global insurance industry.”
There are clear synergies between the work that has been carried out by the CRO Forum’s Emerging Risk Initiative over the past nine years and the research and publications issued by Lloyd’s Emerging Risk team. For example, Lloyd’s can share and gain insight on a wide range of topics including extreme weather, terrorism, cyber liability and nanotechnology.
“As an industry we’ve got to spend more time thinking about the longer-term issues that are likely to affect the pricing and the assessment of risk, and pooling resources across the industry on those thematic issues is very encouraging,” says McGovern.
Click here to download Food And Its Impact On The Risk Landscape.
Lloyd’s is the world’s specialist insurance market and occupies fifth place in terms of global reinsurance premium income, and is the largest surplus lines insurer in the US. In 2013, 89 syndicates are underwriting insurance at Lloyd’s, covering all classes of business from more than 200 countries and territories worldwide. Lloyd’s is authorised under the Financial Services and Markets Act 2000 and regulated by the Financial Conduct Authority and Prudential Regulation Authority.