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FEATURE: Coping with shocks to the system
31 August 2010
Globalisation has opened up a dazzling amount of opportunity for the business world. But it has also produced an unprecedented level of risk for the insurance industry to deal with.
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Trevor Maynard
Ian Goldin
Lord Peter Levene
Lloyd's
Andrew Kendrick
Globalisation has opened up a dazzling amount of opportunity for the business world. But it has also produced an unprecedented level of risk for the insurance industry to deal with.
The financial crisis, which spread around the world in a matter of weeks, put systemic risk firmly in the spotlight.
The insurance industry is lobbying hard in an attempt to distance itself from banks, arguing that it should avoid onerous regulation targeted at financial institutions on the grounds that the industry does not pose a systemic threat.
While insurers may yet prove that that the industry is not systemically important, they are also taking note that the financial crisis was only the first example of the systemic shocks the industry will face that are associated with globalisation. From pandemics to supply chain failures, globalisation has exposed businesses to events that happen far away from their head offices.
The threats in...
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