Risk has no boundaries

ACE France director general Jeff Moghrabi has praised the annual AMRAE Rencontres conference last week as “the highest quality” event in Europe.

Having swiftly turned out this compliment, however, Moghrabi was also quick to point out the future challenges that the industry faces.

The French market is currently concerned with volatility, he said.

“Everyone has been living for a number of years with a softening market, and are starting to realise that this has to come to an end.”

At the same time, however, Moghrabi said budget constraints and concerns about self-insurance were also causing stress within the industry.

He is also concerned that the nature of risk is changing.

“There’s a new systemic type of social/political risk that has no physical boundaries. Major risk is becoming decentralised. It may appear at the fringes and can eventually become major cat-type risk,” he said.

He suggests that the first casualty is reputation, even before the financial consequences become clear.

“Regulatory risk is also high on the agenda; there’s a lot of pressure, and tremendous aversion to risk. The public at large has zero tolerance of risk, but risk-taking is part of human development,” he said.

In emerging markets, Moghrabi said there is more appetite for risk. But in these countries, problems such as pollution have to be solved in far less time than was available to the old economies of the West.

Ethical risk is another factor that is not going away in any hurry.

“Look at taxation,” Moghrabi said. “An organisation that is perceived to be trying to avoid taxation, no matter how legal its efforts, is incurring disapproval. Being a good citizen and a good company is very important.”