Lloyd’s of London Chairman Lord Peter Levene addressed a major security conference in Brussels on Thursday. The meeting, held under the aegis of NATO Secretary General, Jaap de Hoop Scheffer, aims to redefine NATO’s Strategic Concept development process.
Lloyd’s press bulletin explained that the “new Strategic Concept will state the Alliance’s goals and provide guidance on the ‘political and military means to be used in achieving them’, as well as describing NATO’s ‘fundamental security tasks’.”
In opening the conference Jamie Shea, Head of Policy Planning, Private Office of the Secretary General, NATO, explained that a “strategic concept has to provide detailed guidance to NATO governments on the political and military policies to mitigate the risks or at least protect ourselves better from them.”
Levene picked up on that theme in his opening remarks, stating: “NATO and Lloyd’s have one key thing in common – we are both in the business of risk. For 321 years, Lloyd’s has been the place where the world takes risk and this is no different today. What we have inevitably seen though is a huge shift in the types of risks that we cover.
“Just as NATO redefines its Strategic Concept to match the realities of a much changed world in the post-Cold War environment , so an institution like Lloyd’s must adapt to new circumstances and seek to structure itself to best deal with the present and the unknown future.”
This “first stage of the process is a reflective one,” NATO representatives indicated. It aims at “engaging the Alliance, experts, business, governments and other civil society representatives in discussions about NATO’s role.” It was within this context that Lord Levene addressed the attendees.
Lloyd’s long standing risk analysis expertise should be quite useful in outlining the new global context for risk. “I’m not sure I’d subscribe to the argument that the world is necessarily a riskier place,” Levene continued, “but I do believe that we have witnessed fundamental changes in our risk landscape that pose challenges for business and governments alike.”
He described those changes as including both climate change and social upheavals. This interaction, he stated, may potentially result in resource shortages and profound supply chain issues. The latter, he warned, could be exacerbated by the current ‘just in time’ product delivery system that companies across the globe have adopted to keep inventories low.
Levene also noted that while political risks, such as civil unrest and piracy are not new, “these risks are being redefined and are evolving in response to the economic downturn. As the recession bites, the assets of companies operating and investing in emerging markets, with fragile or fractured political systems, are likely to come under increasing threat of expropriation and existing tensions in developing markets could be amplified.”
He also warned that the world must proceed with care when applying innovative technologies, such as nanotechnologies, and plan for the impact of pandemics, stating that Swine flu “should at least serve as a warning” and that we should learn as much as possible from it.
He also highlighted the need to “think the unthinkable” and, as an example, cited Lloyd’s practice of developing “realistic disaster scenarios” to help insurers fully understand the potential risks, as well as its 360 Risk Insight program that researches emerging risks.
In conclusion Levene noted that a “gap has emerged between our heightened awareness of the risk and a lack of understanding as to how to tackle it. We need to close this gap urgently. For future risks are, in all likelihood, going to be of a scale and nature which we have never seen before.
“I am not being alarmist, rather, I am, as Lloyd’s is, taking a calm, educated look into a future in which it is likely that global trends such as climate change, epoch-changing technologies and radical changes to the centre of global economic gravity are likely to transform our world in as yet unimaginable ways.
“So while we don’t know exactly what impact these emerging risks will be in the future, we are doing all that we can to meet our goal of anticipating them to the best of our ability. The interaction between government, civil society, NGOs, academia, organizations such as NATO and businesses in this crucial area, which we try very hard to foster, can only help in reaching this goal.”
The full text of Lord Levene’s address can be obtained on the Lloyd’s web site at: www.lloyds.com.
Source: Lloyd’s of London
Topics Excess Surplus Lloyd's
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