Global Economic Shifts, AI, and Climate Risks: Insights from RISKWORLD 2024

Global Economic Shifts, AI, and Climate Risks: Insights from RISKWORLD 2024

An article from Risk Management Magazine highlighted a discussion at this year’s RISKWORLD conference between Chubb CEO Evan G. Greenberg and Aon President Eric Andersen. A few topics they explored included key global economic drivers, focusing on U.S.-China relations, AI’s impact, and environmental risks.

Rising protectionism: Tariffs and trade barriers are inflating costs and disrupting supply chains. The U.S. deficit, expected to increase by $2 trillion to $34 trillion, is a critical medium-term risk, warning that excessive Congressional spending will crowd out innovation and economic growth.

U.S.-China relations: The relationship between the two countries is “technically stable” but strained by internal risks and Western insecurity over China’s governance and economic scale. However, China’s economic trajectory isn’t optimistic with the state-directed economy and lack of private sector support stifling innovation and consumer spending.

Artificial intelligence: The panel acknowledged AI’s transformative potential and said the insurance industry needs to leverage AI, particularly large language models, to enhance efficiency and spur development.

Environmental risks: The critical role of climate change, including challenges with heat, wildfires, and floods, was noted as influencing insurance markets and the necessity of integrating environmental, social, and governance (ESG) factors into decision-making. The panel emphasized the need for long-term strategic adjustments in the insurance industry due to the profound and enduring repercussions of climate change.