← Risk in Context Podcast
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- [00:02]
A
Welcome to Risk in Context that features conversations with Marsh colleagues, risk professionals, and others intended to help you better understand key risks, build more effective insurance programs, and think creatively about risk. My name is Andrew George and I'm the president of Specialty at Marsh Risk. We are operating in an era of heightened unpredictability, where rules that once underpin global trade, finance, and digital connectivity are shipping rapidly reshaping how businesses operate worldwide. This year's global Risk report underscores accelerating uncertainty, geopolitical and geoeconomic tensions. Extreme weather and the evolving use of AI, among others, can immediately affect operations and financial positions. These changes require senior leaders to rethink risk management to protect critical operations, improve resilience, and be ready to seize the emerging opportunities. In this episode of Risk in Context, I'm delighted to be joined by Carolina Clint, Marsh's Chief Commercial Officer for Europe, Reid Sawyer, head of Marsh's Emerging Risks Group, and Michael Matthews, our Digital infrastructure practice leader. Between us, we will discuss some of the findings from this year's global risk report, the implications of the current uncertainty on organizations around the world, and actions that senior leaders should consider as they seek to build trust and improve resiliency. So without further ado, I'd like to have the speakers introduce themselves first. Carolina, welcome.
- [01:42]
B
Thank you so much, Andrew. Thanks for having me. So, as you mentioned, I am Moshe's chief Commercial Officer for for Europe. I have dedicated 25 years of my career to risk resilience and I guess insurance, and then the past three years really on how this all connects with talent and workforce, business strategy, investment decisions. So really looking across everything that Marsh has to offer and also for the past six years, I've had the great pleasure of talking about the global risk report and deep diving into these macro risk trends. But really happy to join you today.
- [02:18]
A
Brilliant. Thank you, Reid.
- [02:20]
C
Yeah. Andrew, a pleasure to be here with you and Carolina today. In our role is the opportunity and privilege to lead the emerging risk group. This really for us is about how do we connect the strategy of our clients with the risks that they're facing and to be able to view this through a lens of creating risk forecasts. In other words, with the world that's changing and how it's evolving. And the things that you pointed out, Andrew, is how do we help our clients see around the corner, how do we help them understand how to prioritize risk capital and in doing so, not only to better understand downside risk over multi multiple horizons, but then is how does that help our clients enable growth and how do we advise them strategically. So not just about the risk financing, but also how do we help them understand growth and opportunities in this complex environment.
- [03:08]
A
Thank you. And last but by no means least, my Mike.
- [03:11]
D
Hi. Pleasure to be on the podcast. Mike Matthews. I lead Marsh's global Digital infrastructure practice. Spent about 25 years prior to coming to Marsh in data center construction, fiber network and wireless deployments for global customers and have watched a lot of things change in this ecosystem. But today, Marsh has built a very large practice focusing on data center, fiber and wireless, emerging technology, supporting digital infrastructure, emerging energy supporting data center, and specialized private equity investing in the space. We're seeing a tremendous amount of innovation, competition, insatiable demand, creating a velocity of risk in this specific ecosystem unmatched by any other. And Marsh has had the finger on this since 2020, when we first launched the digital infrastructure practice.
- [04:05]
A
For myself, I've been with Marsh many years, but for the last year I've been looking after our specialty business. And really what that is is many businesses around the world need specialist attention, capital, the complexity, the issues they face. And one of the things we build at Marsh over the years is this kind of interconnected web of how we serve those industries. We whether that's the marine industry, the construction industry and various other industries that we support. Okay, so let's now get into the global risk report. This year's report painted a picture of uncertainty for organizations around the world and the world is changing rapidly. This is true for geoeconomic and geopolitical trends, which ranked as a near term risk in this year's report, as well as weather events, AI related risks and more. The evolving conflict in the Middle east highlights the reality of these concerns and has created significant risks for businesses across the sectors and geographies. Marsh continues to closely monitor the situation and provide guidance to help our clients navigate the short and long term people, operational and risk management impacts. So, Carolina, I'd really like to come to you first and I'd like your thoughts about some of the challenges that are really keeping senior leaders up late at night.
- [05:36]
B
There's a lot that is keeping senior leaders up at night. I have to say. It is a very complex environment to navigate and I think for us as risk professionals, we've seen it coming, right? It's been on the horizon and it's gone from just being interconnected to being interconnected and layered on top of one another. Everything is just accelerating and accelerating each other. And now it's gone from like uncertain to wildly erratic. It's like totally out of control, right? It's not easy. So we live in an era that is defined not by isolated risks, but they are totally relentless in their interconnection. And this is what is a little bit driving that sort of stress in the system. So you have geopolitical tensions, supply chain disruptions, talent shortages, workforce implications, regulatory pressures, and it's not separate challenges anymore. They're all tightly woven and it's this complex global fabric. Right. So look at the escalating tensions in the Middle East. So, I mean, if we think, of course, beyond the immediate and humanitarian and political concerns, but for businesses worldwide, this is no longer background noise. I mean, like, geopolitical risk has sort of. We've been able to keep it at the back of our mind for some years. Now. All of a sudden it's, you know, energy prices spike, supply chains falter, market volatility surges. And. And look at disruption in oil supply that can delay manufacturing timelines, and then that in turn exacerbates talent shortages because. Because companies are just scrambling to meet deadlines that are under pressure. So it is very, very connected and equally stressful. But also, of course, corporate, professional. Quite exciting.
- [07:25]
A
Wow. Well, as you said in your opener, there's a lot in there, right? Reid, from your vantage point, how do you see things?
- [07:35]
C
It's an interesting question because I think that risk professionals, leaders, boards have never been more challenged for all the reasons that Carolina just outline as we're thinking about it. But when I ask the question, we step back from this. Some of the challenges that we're facing isn't just what's happening to us, but perhaps we're entering Carolina. It's the way you're describing it, into an era of structural change. And I think we've got to assess this and answer the question for ourselves and our organizations. Right. Is this a temporary moment, as you talked about it, of the speed and the change, Carolina versus are these now system or structural changes that we're underseeing? And I think there's a handful of things, Andrew, that come into play on this. This degree of hyper interconnectivity, Carolina, that you referenced. The thing as we think about speed and the compressed decision cycles that organizations, leaders, boards need to be making about risk. The fact that we have such dependency on complex external systems that guide our organizations and even just think, Andrew, for a moment about the digital and information layer and the fragility within that in which we're operating. And so what that happens, I think what this leads us to is that oftentimes the conventional questions we ask around Risk are flawed. A lot of the times we're asking the question about what are the new emerging risk? What does this mean? And when people ask that question, what are the emerging risks? I think what they're trying to get after is what is new, what, what's surprising to us, what should be added to our watch list. And those are important but. But really not the critical questions because that framing is ultimately too narrow and really the way we should be asking ourselves because many of the risks that we're seeing, geopolitical risk isn't new, cyber risks aren't new for us. But what is new is the way that they're interacting, the speed at which they're traveling, the number of systems, whether it's operational resiliency or otherwise financial, the number of systems that these risks touch. And ultimately, Andrew, I think it's the magnitude of the downstream consequence that we need to be thinking about. And so what that means is that we're asking questions where organizations really struggle with this and why they miss these types of risks or understanding it. It tends to come from, from three to maybe four dimensions. One is a little bit of linear thinking about the risks. The second would be is we have siloed ownership of risk and organizations. Everything that Carolina has described is too complex and we assign individual ownerships without being able to provide that holistic picture. And perhaps I think there's still an optimism bias around our resiliency as organizations. And then what ultimately should be is we're always going to be tactically surprised about the next war or the next issue that's going to happen. But the real failure around these risk questions is when we allow ourselves to be strategically surprised. Because this isn't a question era of structural change where we should be strategically surprised anymore.
- [10:41]
A
Wow. Okay, so what's interesting and Mike, I want to turn to you here. You know, we've heard from Carolina and from Reid this kind of extreme volatility, this confluence of things happening, perhaps unprecedented and equally at the same time. If I think about the build out of digital infrastructure, almost like perhaps a new industrial revolution in its own. When you put all this together and with the trillions of dollars that are being spent and expanding digital infrastructure, how do you see this environment and can you talk us through how that has developed to date and where is the future of investments in the digital infrastructure and systems?
- [11:33]
D
I mentioned earlier that I spent 25 years building data centers before coming to the insurance industry and building this practice out with Marsh. If you take a look at data center in the 90s it was really a pure storage play. So you stored your health records, your tax records, financial records. It was a kind of a passive environment. I'm going to put my storage over there in this data center. It's going to be firmly secure. As you go into the 2000s, you have that storage critical application and then the social application. Social media launched all throughout the 2000s. We're in this third phase. Just about everything we do from tap to pay to social media, how we're entertained today as a society as well as how we communicate. It all sits and relies on digital infrastructure, data center, fiber networks, wireless, the supporting infrastructure, the services. We are so tightly hinged as is a from human interoperability today. And that's only starting to get super enhanced with AI. AI right now is what energy was or electricity at the turn of the century. Electricity didn't invent the light bulb and enable the light bulb. We're sitting in a moment in time today in this third phase of data center or digital infrastructure where AI is going to enable so many things like autonomous logistics, how we're going to move people and product. So we're at this launching stage just like electricity was at the turn of the century in the 1900s.
- [13:08]
A
Okay, Mike. Wow, there's a lot in there. Could you also talk about perhaps the top three challenges that you see with the build out of the digital infrastructure industry?
- [13:22]
D
If you look at the top three challenges in digital infrastructure specific to the data center environment, that's whether you're an organization, owner, operator, developer, or you're a hyperscaler tenant. I think securing power has to be right up front with number one. And the challenge of securing power today is you either have to secure it through utility or you have to develop it as an owner operator next to your data center that you're developing and owner operating. So if you're partnering with a utility, the demands on letters of credit and large deposits are really constraining capital at the developer, owner, operator level. Marsh has developed a surety solution in lieu of letters of credit to aid these developers in securing power. That is an important part because you have three critical mission statements as an owner, operator, developer. One mission statement, you secure your power. Once you've secured your power, you then can secure a tenant or set up a lease agreement with a Hyperscaler, whether it's Mag 7, Terrific 25 or the Fabulous 50. The third mission statement is delivering that data center or infrastructure development on time without liquidated damages. So Marsh has created a whole suite of solutions from acquisition of Power. You have surety backed LC's or surety in lieu of LCs. We've helped with contractual obligations and SLA insurance for the tenant lease agreement phase. And then three everything from a suite of construction products to delayed startup, liquidated damage, cover for delay in delivery. We've aligned our solutions with those three mission statements of any owner, operator, developer. And I think that those are three massive challenges for anyone building either a data center that's pulling power off the grid or a data center owner, operator developing a data center that is going to have its own power on premise behind the meter.
- [15:29]
A
We've looked at some of the risks and we've mapped some of them. We've defined the problem. Let's then talk about the capabilities and how's our ability to absorb this. One of the things that gets talked a lot about is trust. Trust internally, trust with people, trust externally, business partners, clients. It's this key thing, it's a key word that crops up time and time again. Carolina, as we think about this,
- [16:06]
C
how
- [16:07]
A
should we be thinking about trust in the context of the issues we're facing?
- [16:12]
B
I love that you bring that up, Andrew, because I think it's way more important than most people realize and especially when things are changing so fast in this crazy environment that we're trying to navigate. Because trust actually helps move things faster, right? Because when you trust people, you don't get stuck so easily in that endless back and forth of layers and approvals and stuff, right? So high trust organizations make decisions quickly, flag problems early and work across teams without all the usual roadblocks. And on the flip side, low trust places waste time on defensive reports, extra controls, a lot of red tape. And in the global risk report this year, it really points out that when shocks hit all at once, delays can be deadly. So this is why I think trust is one of those assets that cuts through delays and keep things moving, right? And then I also think about trust as a shock absorber when things go wrong. Because if you have built trust, customer might cut you some slack, regulators are a little bit more willing to work with you, employees stick around even if things are tough and partners continue to collaborate with you instead of walking away. So when systems will break down, it's really the relationship, the trust that decides whether or not you survive. It also gives you more options. So if you are a trusted entity or a trusted leader, it lets you build partnerships faster and form coalitions and improvise maybe more when plans fall apart, all before everything else sort of catches up with you, whether it's contracts or rules or regulations. So I think in a world that is so fragmented and complex, being able to cooperate flexibly often matters more than having everything perfectly aligned on paper because it helps avoiding that one panics and everyone doing the same thing at once. Right. But it's also important to remember that trust builds quite slowly, but it can fall apart in a flash. Right. So one slip up can bring regulatory heat or cause Apple's to leave and, you know, really create a lot of challenges. So trust is like a battleground. It's fragile and precious and you have to continue building it continuously.
- [18:34]
A
And.
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B
And I think it's also important to talk about how, how do you build trust? Because it's easier to talk about it. But the question is like, okay, so what do I do? It is a lot about being consistent and especially maybe when things get tough, being honest about what you don't know and being fair about who takes the hit when things go wrong. Making sure that what you say matches what you do. Because people trust you and you build that kind of rapport when they can predict how you will act, not just because they like you. So that's why I think in an era that we're seeing now structural volatility, trust is really not soft capital. It's so easy to dismiss it as something fluffy. It is strategic infrastructure. It determines how fast you move, how hard you fall, and whether or not others choose to move with you when, when the system is under strain.
- [19:28]
A
Thank you. Some really nice insights there that we can take away when we think about the challenges we've got in front of us. So some really good, some really good guides there. Reid, I want to turn to you. You spend your life in the C suite of many companies. Why should boards care about trust?
- [19:49]
C
You know, it's, it's. I just listening to Carolina, your, Your answer that you gave, I, I really think about trust as a. It's. It's not just right that it helps us move fast. I love that framing. But when I was listening to you say that, Carolina, it's really. Trust is a transmission channel in organizations. And when we see operational or conduct failures in organizations, they really tend to become strategic risks. Andrew, when the confidence deteriorates amongst the stakeholders in that organization, that may be shareholders, that might be stakeholders of the leadership and seeing it, but when there's that trust, that shock absorber effect Carolina, you spoke about. Right. That allows us to come back. And in transmission, I think we end up in a very different position. And so as we think about that internally to an organization. I think there's another compounding effect that, that our organizations, entities, governments are struggling with today, which is the external dimension of trust. I would argue that we're living in a post truth environment, right? Where the question becomes is what is it that I see in my news or in my social media feeds and how do I trust that? How do I trust the data that I'm getting if I've got to make quick decisions about supply chains or resiliency movements when the information that I'm getting may have a decided spin or may indeed be false or misinformation or disinformation, as the Global Risk Report has talked about for a couple years on those dimensions. And so the question becomes is not just now how do I think about the decisions in the trust internal, my stakeholders, but how am I interpreting the data around me? And Andrew, I think there's one other dimension to this that is going to be significant as we're moving into this era of AI. We, we talk a lot in cybersecurity. For years and years ago, we talked about the perimeter security of an organization. And then that concept was quickly replaced with this idea of what's my attack surface? Understanding that it's not a moat and offense. I think that the nature of trust in the organizations in 2026-2020 30 is really going to be is do I have trust in my decision architecture of a company as AI embeds itself as we became AI enabled? How do I make sure that I've got the trust of the information, the integrity of the data, that I understand the flows of information and what happens when I lose my decision architecture, when we have leaders and managers and our managing agents, as we're changing the way we work and as our workflows change. So this idea of trust has multiple dimensions. I'll tell you just maybe to bring this back into the way we're talking about it from an insurance perspective for a moment, and I'll close on this point on this issue, is when you look at the indices around trust, the Edelman Trust barometer is maybe one of the gold standards on this front. And when you look at the data, it's talking about how the public, how people are losing faith in corporations, how they're losing faith in CEOs and the erosion of that trust. And what we're watching that play out in very real terms is around the liabilities and the way that what's happening, especially in the United States, is around this idea of social inflation and what's driving it and so as Carolina was coming back to this idea of trust being that shock absorber, how do you connect this? How do you get in front of a problem? Really changes the way that as we start to understand and as we measure and we dimension what the liability risks are going to be for our clients, it's crucial as we're thinking about the risk financing structures to understand what's happening with the way trust is being perceived in our environment.
- [23:31]
A
Yeah, it's really interesting and I think if I take your comments, it's multidimensional. I like to always put these things into context of my experience and I think about work we've done, whether you know, you're both talking in a very sort of strategic, at a high level. But if I take that back down into day by day deals in the market, day by day dealings with colleagues. Right. You know, a lot of what we do is all around, yes, there's a lot of very good data. Yeah, there's a lot of good insight that we can drive. But people deal with people they trust, people buy from people they trust. Right. People, people work for companies where they trust people. And so I think this is something that what you're really showing is with the complexity of the landscape that we're operating in, that trust is really right at the heart of solving and helping us with the issues as we tackle in every facet of what we do. So Mike, I want to come back to you. We talk about these mega, mega investments, complex systems, complex technology, huge investment in the digital infrastructure, space, multilayers, different stakeholders, where does kind of trust and building that with partners for what are maybe decade long relationships as some of these infrastructures are built and perhaps with some of the capital amounts at levels we've never seen before. Where does trust play a role in structuring those contracts?
- [25:20]
D
We mentioned that Marsh started our digital infrastructure practice just before COVID as some of our global institutional private equity funds started to build specific digital infrastructure funds that were dedicated to the ecosystem. We've been a trusted advisor for the world's largest private equity groups as well as well as smaller specialized investors. And they're constantly asking us what's coming around the corner, where's the puck going? And we've created a level of trust over the last five to seven years we've been working with them is really being truly innovative and risk, an emerging risk. And some of the emerging risks, you know, we've spoken about whether it's contractual risk transfer, skyrocketing values in assets, life cycle management, of revenue contracts and asset management. These are things that, you know, the, the world's largest investors rely on us for guidance and how to transfer that risk, how to finance that risk and how to get speed to market without penalty and how to operate without downtime and penalty.
- [26:30]
A
Thanks Mike. That's really interesting. And I can see through all of the conversations trust is really important and how we find effective ways to transfer risk and how we do it at a fast pace. To do that effectively, we need to build a resilient organization that can withstands shocks. There's no doubt recent events in the Middle east highlight how quickly shocks can cascade across multiple risks sectors geographies and it kind of underscores the importance of building organizations that can be resilient to these cross border impacts. Reid, I want to come to you and I'd like you to give us some thoughts on actions that senior leaders that can consider. What can they consider when they want to build more resilience in their organizations?
- [27:34]
C
It's an interesting question because if the conversation, if we're right in the ideas that we've been putting forward here, if these really are structural changes, Andrew, and we think about what resilience, resiliency means, I think organizations need to be planning for an era of discontinuity. This is not a world right now where we're going to be cycling out of risks. Right. The risks are stacking. We notice that in the data. And when we're looking at this at a practical level about how do we build risk financing structures, the risks are non linear. And so as we think about these factors, what does it mean to be resilient? I was sort of flip the question a little bit and suggest that we need to be thinking about what does it mean to be antifragile. You know, to borrow from Naseem Tlaib's concept on this, because if we think through this idea about resilience for being antifragile and organizing for an era of discontinuity, two things really are standing out to us in some of the research that we're doing Andrew, as we're thinking about this here at Marsh Risk one is and while not fully completed yet, but to give a sneak peek of what we're finding is that looking at almost 500 companies over the S&P, 500 for 444 companies for the last 30 years, we're finding that 16% of those companies is what we would call an all weather company. They have higher total share return during eras of crisis. They have better leadership structures, they're outperforming their peers in the same period of crisis. So this question of resilience isn't one about business continuity or enterprise risk management. Those are tactical actions that have to be in place. In inculcating ourselves in these idea of resilience is really about how do we perform better and have better share return for our shareholders. How is it that we can weather through these storms? And I think there's three things that come out of this that we're seeing in a very practical sense. One is taking the ability or deploying the ability, excuse me, to be thinking about how do we price for uncertainty certainty, how is it that we're not just talking about scenarios and what could happen in the future to test the resiliency mechanisms, but using financial stress testing methodologies and to be thinking about risk capital, about what's the marginal utility of the next dollar that I spend and then how do I know where to prioritize that in my ecosystem? And this idea of resiliency really starts, Andrew, I think with the first step is, is what's the risks that I'm willing to absorb? How do I have a view to that? And is that view of my risk tolerance shared amongst the leadership team? How does that then change? And as we think about like how much risk that I want to then invest in in my company, what's the price in the premium of risk mitigation that we need to be thinking about? And the third point of this triangle that I'm, that I'm, that I'm drawing here, if you will, is then how much risk do I want to transfer? How do I think about it? And resiliency is really about how do I balance between these three points? And then when I put that pricing on that uncertainty and I'm thinking about what the volatility loads can be now all of a sudden we've got a common denominator that leaders across an organization can think through the different scenarios, taking that all hazard approach, if you will, for a moment and then understanding really what does this mean as we're being moved, moving forward, that then I think does something that's really interesting here and I'll, I'll pause on this in a moment. But if we were to reframe this a little bit as what's the resiliency premium? How do we understand that if we're pricing that because now all of a sudden we're talking about risk capital in value instead of talking about resilience as a cost set. And suddenly then Insurance becomes a shock absorber, as we like to think about, and risk transfer. But now we can take a single pane of glass and think about not just the commercial placements, the captives, but the balance sheet and the capital market solutions to be helping and guide our clients as they're moving, moving forward. This, and maybe, Andrew, the last thing I'll say on this is perhaps a bit controversial, hopefully not too much, but I would argue that resilience is going to become the next alpha factor, really this measurable driver of value creation. Back to this research that we're doing that's showing that only 16% of the S&P 500 over 30 years are in that all weather category. And so how do we get after that and understand how we're transferring risk in a way to help our clients be in that all weather category?
- [32:04]
A
Okay, so a lot in there. So, Carolina, I'd like to ask you, Reid has given us some great things that we can do there, things that we can think about. But you know, Carolina, how do we get at it?
- [32:18]
B
Yeah. And you know, I think Reid had some really interesting perspectives. I love this idea of resilience as a value creator. And I think it's like we're at the point in time where, you know, companies cannot continue to design and push for efficiency in a world that really rewards resilience. It just doesn't work. Right. So I mean back to what we talk about almost every year is like balancing the short term view of risk with that longer term perspective. It continues to be super important. Right. But at the same time making communication a core capability at the same time as we have to expect communication to cut because of, you know, vulnerable critical infrastructure, power outages, misinformation, which by the way is, is supercharged by generative AI. So pre bunking, in fact, is a concept that I've talked to a lot of clients about how, how do we create something again back to trust something that is predictable. How do we tell our people and train them if this happens? You can expect this because if something else totally different happens, that and that they, they're not expecting, they're more likely to switch on and think, wait a minute, I probably need to be sustained suspicious here, right? So thinking about how to pre bunk as much as possible, find the colleagues and the employees that are interested and good at risk and resilience and train and elevate them so that you have a little army of risk communicators, right? Think about how you create storylines so that people can imagine and think about Almost do their own little scenario planning. If this happens, what is my role in this? How can I support keeping this organization on track, even though maybe, you know, it's difficult to get clear messages or what have you. So evaluating that organizational agility and re empower leaders and employees to act if things suddenly fall apart. And then I do want to say, when risks are so interconnected, the way that we see risks developing and really where the world is headed, I think it's so important to recognize the fact that many of these risks are not turning into very systemic risks. And that type of risk cannot be solved by any one organization, any one person in isolation. We have to move away from this silo thinking. And in a world that is more competitive than collaborative. There's also something to be said about really pushing that view of yourself as part of an ecosystem. Like try to find ways to be collaborative, find ways to, you know, partner on solving things. Because the world is going to need to come together in order to solve for these more systemic risks and the way that they're interconnected.
- [35:13]
A
Thank you. Thank you. So Mike, some really great insights there. Coming back once more to this massive infrastructure build out, how do you, the stakeholders and participants in the build out of digital infrastructure, how should they think about how they build resilience within their organizations?
- [35:36]
D
Digital infrastructure, specifically data center is under constant innovation, whether it be for cost savings, efficient operations or social government regulation. And I'll give a few examples of that. For years, data centers relied on trusted technology for backup power, diesel generation, underground fuel tanks. There's been a mass migration due to both electrical efficiency, cost and investment strategy and also at the same time regulatory pushback for the use of diesel generation backup. So as data center takes a trusted platform like diesel generation backup and moving to battery backup, they have to deploy that, they have to train staff, they have to make sure that they're engineered properly for fire hazard. So data center and digital infrastructure at the constant innovation point of risk, and as they're deploying this new technology, they also have to look at proper risk engineering, putting the right insurance in place, the right redundancies. Another example of that is liquid to chip cooling. For many years, data centers relied on air cooling, water cooling, crack units. There's a lot of new liquid immersion cooling systems being deployed not only to save water from a regulatory standpoint and social benefits, but also to extend life of assets and investment. And as these, those are just two examples of two big innovations in data center that have changed operations on a daily level. It's a Change in operation, change in technology, It's a change in risk. So we really have to stay in front of that at all times. And it's really something that the entire ecosystem is always doing with that constant innovation and challenge.
- [37:23]
A
As I think about this, about trust and preparedness and taking time, there's no doubt to my mind the companies that prepare the most will probably be the ones that are most successful as they think through these interconnected, complex issues. This isn't easy, right? This isn't straightforward. But therefore, let's take the time out to really tackle these challenges. We're coming to the end of our episode and really I'd like to ask my colleagues for kind of one final takeaway. There's a ton of stuff in here, but I'd really like our listeners to take away one thing each. So, Carolina, what's the one thing that people should take away?
- [38:13]
B
You're tough, Andrew. One thing. Okay, so I would say static risk registers, lists of risks is not going to cut it. Right? The interconnected nature of risk needs to be recognized. And of course, it's important to also sort through and think about what is it that we build resilience for. Thinking is you will not get it right. But that's okay because the good thing about risks being so interconnected is that resilience measures have spillover effects too. So it's not all bad news, right? So if you pick a couple of risks and you are very disciplined in implementing resilience measures, this will build a much more resilient organization so that you are ready whatever ends up hitting you at the end. So I think that is the good, positive and the silver lining of this interconnected mess that we're dealing with.
- [39:05]
A
Great, thank you. Thank you, Reid.
- [39:08]
C
Somehow Carolina always manages to put a positive spin on what I see as a very dark and stormy world. But I so appreciate, which is why we work so well together, Andrew. But I think the one thing I would leave the listeners to on this is that the biggest risks that we're facing today isn't a cyber risk, a climate risk, or geopolitical. And I would even argue not just the combination of those factors. Instead, it's the fact that too many organizations are using frameworks that were built for the world that no longer exist. Whereas Carolina talked about that we manage it off on a list or register. We think about risks that are discrete, bounded, maybe even somewhat controllable. And the risk frameworks and the way that then we're priced, pricing, risk, and the way then therefore we're Transferring risk is is is not meant for the world that we're in where the volatility is high and where shocks matter and really what that means back to to alpha and to to total share return. So the takeaway for me Andrew is this is that we've got to have a deploy better frameworks that allow us to build risk forecasts that allow us to prioritize risk capital and to develop strategies for our clients and therefore how do we then design forward looking risk transfer strategies allow it to align to our clients commercial strategy that aligns to their long range financial plans and that risk transfer program should have a three to five year horizon as we're thinking forward in building those forecasts.
- [40:36]
A
Thank you. Thank you. Mike, your thoughts please.
- [40:40]
D
Whatever we're doing today, no matter how new the technology, no matter what the contract, the average lifecycle of a technology and a deployment in digital infrastructure and data center is about 5 years. So that means that every 3.5 years is a massive shift in focus to reinvestment re engineering and renewal of contract. So I think keeping that life cycle in motion is a risk in itself. And surrounding yourself with experts who are dedicated to the space from your strategic service providers, your strategic OEMs, your strategic partners, be it finance, risk, insurance consultants. It's very, very important. And I go back to that tightly wound ball. Whether it's an OEM change or an OEM challenge, a raw materials challenge, a shift in technology, economic downturn, that totally wound ball is under a lot of stress and has to be cared for with kid gloves.
- [41:45]
A
Thank you. That's great. There's some really great things and for me, I kind of take this pretty simply, right? Collaborate, build, trust, prepare. You can't prepare too much, you can't ask too many questions. You can't get at this enough. Just be prepared. Thank you all for listening. Thank you all for joining this edition of Risk in Context. We hope that you enjoyed as much as we did the discussion that we've had. You can rate, review, subscribe to Risk in Context on Apple Podcasts or other apps that you subscribe to. You can also follow Marsh on LinkedIn or X. In addition to your podcast feed, you can find more episodes of Risking Context and more insights from us at Marsh, including this year's global risk report on our website, marsh.com and until next time, thanks for listening.