A Dystopian “Reality”…?

Just in case anyone was thinking of entering 2016 in an alcohol-enhanced glow of good-feeling, augmented by thoughts of getting hold of an Oculus Rift (or equivalent) virtual reality product , we thought we’d provide a look at Dystopia- stiff drink to hand! Scrooge is a “has been” when it comes to pondering Christmas Future…

We have written a number of times about the risks and possible implications of Big Data and Artificial Intelligence (AI) both in general, and in how they may impact the (re)insurance industry; but now consider those posed by Virtual Reality (VR) and Augmented Reality (AR.)

While the level of impact remains debatable and controversial, there seems little doubt that the rise of what one may term the digital component of our world in all its myriad forms is beginning to influence human behaviour and cultural practices, and often not in a positive may (at least for the curmudgeonly, Grumpy Old Men amongst us!) What if we move beyond a world in which the phrase “couch potato” and concern about rising obesity, to one in which a form of eugenics streams humanity into “meatbags in a pod” and those who are “as gods”? Think of The Matrix crossed with Soylent Green, and add a leavening of Brave New World, with a soupçon of Blade Runner…- the anti-Hunger Games!

One of the problems that we humans face is that we tend to crave stimulation and excitement, yet many probably lead lives of quiet desperation [Yes, we are in a very dark place at present!] VR and AR, coupled with the other aspects of digital technology, provide a mechanism for satisfying that craving, while husbanding scarce or increasingly expensive tangible resources, or even intangible “goods”, such as education or clean air. If your existence and “reality” are circumscribed by a screen or a headset, how much individual living space do you really need- a 20 foot container crossed with a Japanese love hotel…?

So, swiftly returning from the Slough of Despond to the Broad, Sunlit Uplands of (re)insurance, consider the potential consequences:

– Rising morbidity
– Significant shifts in demand for tangible products
– Shifts in the need for particular skills
– Behavioural changes, including the addictive
– The extent of regulation of new risks
– New product lines yet undreamt
– Ever faster decision-making processes (via augmented reality, for example)
– Political manipulation

No doubt the Emerging Risks teams within firms’ Enterprise Risk Management functions are already trying to understand and work through the issues we have described. If they are not, they should be. After all, potential outcomes will affect both sides of the firm’s balance sheet, as well as the processes of the entity itself; and there will, therefore, be the need for a truly holistic approach if the analysis, and the decisions that flow from it, are to have any real value, as opposed to amount to simply ticking a box and living in hope.

By now, Dear Reader, you will have gathered, that, at Awbury, we are trying to discern and judge the impact of trends that may, at first glance, appear to be tangential to our focus on E-CAT (the management of complex economic and financial risks), precisely because, in our view, experience in the real world teaches that it is the unexpected or the unanticipated risks and events that cause the most harm- and we have no intention of being complacent about, nor dismissing out of hand, issues that are only beginning to be discussed and are, as yet, barely understood.

And just one final thought: how do you know that you are real? [Philosophy 101…]

The Awbury Team

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