PCS calls for SRCC risk transfer index amid growing global volatility

With global political instability spelling a rise in Strike, Riot, and Civil Commotion (SRCC) events, PCS (a division of Verisk) has highlighted the urgent need for a robust risk assessment and transfer tool or, SRCC index.

“From escalating trade wars and crippling sanctions to simmering regional conflicts and armed clashes, recent years reflect an increasingly volatile world,” PCS observed in a recent topical report.

The firm continued, “From Political tensions in Latin America, further inflamed by the global pandemic, to the ever-present threat of armed conflict in regions like Ukraine and Israel, businesses operating in these environments face constant uncertainty.”

PCS also underlined the escalating tensions between China and Taiwan, where even a minor incident could reportedly have “far-reaching implications” for global stability and supply chains.

According to the firm, the increased frequency and severity of SRCC events demand a shift in business strategies, while the escalating intensity shows the urgent demand for an SRCC index.

“Why do we need an SRCC index? Imagine having a standardized metric to gauge the potential impact of political violence events – a tool that quantifies the risks associated with strikes, riots, and civil unrest,” PCS said.

The firm added that by providing a clear and objective measure, such an index can empower stakeholders across various sectors to accurately assess risks, make informed investment decisions, and bring capacity to the industry.

It’s important to note that PCS indices for U.S. catastrophe events are embedded in global risk transfer markets, while international cat loss events, marine, energy and aviation loss events, cyber loss events, and more have already been launched and utilised for industry-loss based risk transfer, reinsurance and retrocession arrangements.

Therefore, it’s not surprising that such demand for an SRCC Index exists, given the current global outlook.

PCS continued, “For global organizations, insurers, reinsurers, investors, and even governments, an SRCC index serves as a valuable tool.

“By analyzing historical data and current trends, the index provides a view of potential losses during extended or particularly damaging SRCC events.

“Armed with this knowledge, stakeholders can proactively prepare for the financial repercussions and help hedge some of that exposure, while also bringing additional capacity to the market.”