Arctic a ‘hotbed’ for emerging risks, AI next in line, says Swiss Re report

From potential conflicts over new Arctic trading routes to cyberattacks on artificial intelligence systems,  Swiss Re’s 2023 SONAR report highlights a complex emerging risk landscape.

The 11th edition of the SONAR report sheds light on 17 new risks and trends across technological, economic, social and environmental areas.

One of the key threats straddling across sectors is the “Arctic opening”, Swiss Re noted. As the Arctic Ocean and adjacent land are warming up two to three times faster than the rest of the globe, the ice is melting, and new shortcut shipping routes are opening up. However, the area is a hotspot for potential geopolitical tension, provoking concerns over how economic activities and related risks will be controlled in the region.

Patrick Raaflaub, Swiss Re’s Group chief risk officer, said: “The concurrent increases in economic interests, environmental change and geopolitical tensions make the Arctic a hotbed for emerging risks and potential risk accumulation. With SONAR, we aim to proactively engage our clients and industry stakeholders in discussion of emerging risks, as we find this is the best way to be prepared.”

A more “futuristic but potentially significant” risk examined by SONAR is solar radiation management (SRM) technology, which could be used to cool the earth, Swiss Re said. While this does not address the root cause of global warming, namely greenhouse gas emissions, it could help lower global temperatures.

However, techniques such as injecting highly reflective particles into the atmosphere to reflect sunlight back into space could open up a whole new set of environmental risks and the potential for international conflicts. If implemented and then suddenly terminated, the result of SRM could be fast temperature increases, bringing on related weather effects. It could lead to an increase or geographical shift of extreme weather events like droughts or hurricanes. A significant challenge would then be how to provide compensation to those adversely affected.

The report also highlights emerging risks associated with complex machine learning systems and artificial intelligence. These two high-impact areas are driving the next wave of technological advances. However, as AI use increases, so do the possible risks. Professional hackers can not only trick models into making mistakes or leaking information, they can also harm model performance by corrupting training data or stealing and extracting machine learning models.

The SONAR report emphasises how the rise of AI is increasing opportunities for fraud and intellectual property loss, such as phoney creditworthiness ratings or false insurance scores. In car insurance, AI-based claims management systems may even be tricked into seeing massive damage where there is none. If AI gets hacked, it could even result in physical harm by causing autonomous car crashes or medical misdiagnoses.

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