We live in an increasingly uncertain world where it is hard to know what’s coming around the corner next. That’s exactly what happened with the COVID-19 pandemic, which has resulted in hundreds of thousands of deaths and devastated many businesses worldwide.
That’s why we have created the VUCA World Risk Index. VUCA stands for Volatility, Uncertainty, Complexity and Ambiguity. The first of its kind, the parametric Index uses cutting-edge machine learning technology to gather data from a wide range of trusted and verifiable sources across the world. That data is then analysed rigorously to determine the likelihood of a major event occurring over a defined period of time.

Foreseeing the Risk

There are two indices: the main VUCA World Risk Index and the Price Model Premium Index. Both are freely accessible here. The Risk Index shows the average probability of the five biggest global risks happening in an easy to understand line graph format. The Premium Index displays the average premium for the different perils.

For more specific information, including each of the main risks and the evidence behind the data, subscriptions are available, or you can choose to receive an individual report for a one-time payment. This level of detail is extremely valuable when it comes to accurately pricing your risk and obtaining the best coverage possible.

Harnessing the use of technologies such as artificial intelligence (AI) enables us to proactively identify and evaluate new and emerging threats. Machine learning takes this one step further by automatically improving systems using information it has gained from previous experiences, helping you to better forecast and, thus plan for, future events.

The biggest threats

Pandemics

Risks come in many forms and are occurring now much more frequently and on a larger scale. A pandemic is one of the most dangerous; a highly infectious disease that spreads across a vast area, usually multiple continents or even worldwide. The deadliest recorded was the Black Death in the 14th Century, which killed an estimated 75 to 200 million people.

Among the most prevalent forms of pandemic throughout history have been HIV/AIDS, cholera, influenza, typhus, smallpox and measles. Others include tuberculosis, leprosy, malaria and yellow fever. Although the threat has greatly receded thanks to advances in medicine, they often come back in new and far deadlier strains.

Cyber Crime

Another ever-increasing threat is cyber crime. Fuelled by the exponential growth in digitisation, greater interconnectivity and state-of-the-art technologies such as the Internet of Things, AI and blockchain, it’s estimated to cost the global economy almost $600 billion every year.

Cyber crime has become so sophisticated that hackers are inventing new methods of attack every day. Its wide reach extends to financial fraud crimes, cyber terrorism, cyber extortion, cyber sex and drug trafficking, cyber warfare, malware and phishing scams. As technology continues to evolve, so the cyber criminals will continue to find new ways to expose it.

Climate Change

The most far-reaching existential threat, however, is climate change, with the rise in temperature in recent years linked to violent fluctuations in weather such as flooding and wildfires in recent years. At its most extreme, climate change has the potential to trigger a Green Swan event, causing untold damage to our wider environment.

As time goes by, we are likely to see even more unexpected events brought on by climate change. That was borne out with the unprecedented Australian wildfires earlier this year, which raged for months, destroying whole towns and communities. And it’s not just in the usual disaster hotspots either; heatwaves in northern Europe are fast-becoming the norm.

Terrorism & Political Risk

Terrorism and political risk is another fast-growing peril, which came to the fore in the wake of the 9/11 attack on the U.S. and has been perpetuated by the rise of Al-Qaeda and latterly ISIS.

Nowadays it takes many different forms, including civil disorder, political and non-political terrorism, quasi-terrorism and official or state terrorism. It also encompasses criminal and pathological terrorism. As the stakes become higher, with the world becoming more fragmented than ever before, the threat of terrorism, whether driven by religion or politically motivated, is only going to heighten in coming years.

Covid-19

COVID-19: the event nobody saw coming
COVID-19 was a Black Swan event that almost nobody saw coming. A black swan is an unforeseen event outside of what would normally be expected that has severe and long-lasting effects.

Within days of the initial outbreak, the virus had already spread halfway across the globe and authorities were scrambling to come up with a plan to tackle the pandemic. But had it been detected at the outset, countries would have been far better equipped to mitigate against the problem and lessen the number of deaths and economic impact by putting the necessary controls in place.
Evaluating future perils
This is where the VUCA World Risk Index comes in, by giving you as accurate a picture as possible of the potential global threats that could most affect your business.
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