Technological enhancements bring new opportunities to businesses but the pace of innovation must be met by the pace of corresponding safeguards to deal with the risks. In particular, the risk of cyberattack is a great concern. The pace here is really changing very rapidly. As with the other risks, insurers are affected for both good and ill: with ever more frequent and increasingly sophisticated cyber-attacks on businesses and individuals, insurers are being relied upon more and more for protection. A new business opportunity for sure. But, unlike most other insured risks, insurance firms could themselves be significant victims. It is difficult to predict how cyber-crime – or even cyber accidents – will evolve, and it is very challenging to obtain data for losses that arise out of cyber-events. This makes it all the more difficult to quantify reserves, models and prices as well as develop operational safeguards internally. An Insurer wishing to expand into any new business area needs to demonstrate to the PRA that new risk exposures are well understood and that the required capital for an altered risk profile has been fully considered. As stated previously, business model analysis forms an important part of the PRA’s supervisory approach and a focus for its supervisory activity. Insurers will need to deal with the PRA in an open, co-operative and constructive manner to allow us to understand whether the business model is sustainable and to identify key vulnerabilities. This will ensure a more informed, focussed and proportionate supervisory approach.

The withdrawal of pandemic-related relief measures in major economies and the economic slowdown in China also weakened external demand and, together with the lingering supply chain constraints, contributed to the slowdown in global trade. The recent geopolitical developments have also caused major trade disruptions, tilting policies towards greater self-reliance or “friend-shoring” among the advanced economies (AEs) in order to protect their supply chains. The mediumterm scarring effects of the pandemic on the products and labor markets and productivity, yet to be fully assessed, also weigh on growth. The October 2022 WEO has pared down growth projections for the fourth consecutive time since last year with a clear possibility of further downgrades if the geopolitical risks are not diminished quickly and materially. We are increasingly concerned that the current geopolitical risks will turn into lasting geopolitical fragmentation, posing serious threats to global trade, capital flows, technology transfer and climate policy cooperation. It is still early to declare victory in our fight against the pandemic, a once-in-acentury health crisis that paralyzed the world with untold loss of lives and livelihoods. It is important that we do not lose sight of resurgence risks of new and more virulent COVID-19 variants in the context of a still-low vaccination coverage in the low-income countries (LICs), particularly in Sub-Saharan Africa, and vaccine hesitancy in parts of the AEs. The cooperation that brought us together in the global fight against the pandemic should continue with full force towards equitable and affordable global accessibility of vaccines, tests, and treatments.