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Emerging risks create challenges

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NANTES, France—Emerging risks and changing attitudes toward risk present a challenge to risk managers, insurers and government, according to speakers at this year's annual conference of the Association pour le Management des Risques et des Assurances de l'Entreprise.

The theme of the conference, held in Nantes, France, last month, was "The New Risk Engineering."

Addressing delegates at the conference, Michel Yarhi, outgoing president of the French risk management association AMRAE and group insurance manager of Paris-based bank Societe Generale, said that society has become more risk averse and that risk managers have a role to play in this "evolution."

And increasing litigiousness on the part of the public means that companies are more likely to find themselves compensating claimants—regardless of whether or not they are at fault—simply because they are solvent, he noted.

In addition, new technologies and developments give rise to future risks in which risk managers are unaware of at the time, he noted, citing the examples of asbestos and animal feeds that gave rise to variant Creutzfeldt-Jakob disease.

Today, for example, he said, nobody can really be sure whether there are health risks associated with the use of cell phones.

Technology risk, reputation risk, and intangible risks are all matters of concern for today's risk managers, he noted.

And while some risks can be assumed by governments, state programs cannot take them all on, said Xavier Musca, director general of the treasury and economic policy department of the French Ministry of the Economy, Finance and Industry.

The government will, therefore, attempt to find different responses to emerging risks. For example, by trying to enable "financial actors" to address them, he said, noting that the insurance market is more efficient at dealing with risk than is the state.

Underwriters would like risk managers to more closely evaluate the relative attention paid to liability risks within their organizations compared with that given to physical loss, according to Alexander Baugh, president of AIG Europe S.A.

There often seems to be much more emphasis on physical risks than liability threats, he noted, adding that the trend of liability losses in Europe, and in particular France, is growing, he said.

One phenomenon increasingly being seen is "European copycat claims" whereby once a legal action has been settled in the United States, for example, European shareholders decide that they too should be compensated, said Mr. Baugh.

Other potential areas of increased liability include employment practices and global warming, he noted.