Crypto

Crypto and quantum computing among the main risks pointed out by Swiss Re

Crypto assets and quantum computing have been singled out by Swiss Re analysts as two of the most important emerging risks for insurers and reinsurers, with the potential to create new risks within the global financial system.

cryptoSwiss Re’s 10th edition of SONAR covers 14 emerging risk topics in technological, economic, social and environmental areas, but this year focused in particular on trends in digital finance and the ever-imminent threat of climate change.

In today’s highly technology-dependent financial system, analysts noted that cryptocurrencies like Bitcoin and Ether are increasingly establishing themselves as potential rivals to mainstream currencies.

And along with these new forms of currency have come more crypto assets, such as tokens, that allow people to buy digital representations of real assets, such as works of art or real estate.

Swiss Re warns that fluid ownership, taxes, regulatory issues and other risks related to new asset classes present insurers with new challenges, for example if certain crypto assets are implicitly covered by existing cyber or property policies.

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The security of the new digital financial economy also faces new risks due to quantum computing, as a new generation of computers is about to complete tasks that are far beyond the reach of current machines.

These hyper-intelligent technologies offer significant benefits, including sophisticated weather models, advanced medical research capabilities, and financial analysis.

But Swiss Re also warns that with increasing maturity, they can also become a threat to existing IT security protocols, potentially hacking into standard encryption keys used in online communications and data transfer.

Other emerging risks explored in the SONAR report relate to balancing carbon emissions with agricultural production, as well as how thawing permafrost could damage infrastructure, accelerate climate hazards, and release disease-carrying pathogens.

“A global pandemic, geopolitical conflicts, rising inflation and an unstoppable climate crisis – these are just a few of the many risks that SONAR has examined over the past decade and that have finally materialized,” said Patrick Raaflaub, group risk director. at SwissRe.

“However, investigating new risks is not about forecasting. It is about raising awareness about the risks that can impact society and preparing ourselves accordingly.”

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