Cyber attacks and cyber terrorism rank among the top emergingrisks concerning the reinsurance industry in the year ahead,according to the latest Guy Carpenter & Co. survey.

The third annual survey polled insurance and reinsuranceexecutives at the 2014 Property Casualty Insurers Assn. of America(PCI) Annual Meeting held this year in Scottsdale, Ariz. The surveywas designed to identify what reinsurance professionals believe arethe key drivers and threats to profitable growth in the industry.This year's survey examines which emerging risk respondents felt tobe most threatening to the industry in the coming year.

Forty percent of the survey participants ranked cyber attacks asthe most threatening emerging risk, while 31% and 29% citedterrorism and climate change as the most threatening. Incomparison, 82% of survey respondents felt that space risk was theleast threatening to the industry.

“Cyber-attacks are one of the most serious economic and nationalsecurity challenges facing not only the insurance industry, butgovernments and businesses around the world,” said Andrew Marcell,managing director and chief executive officer of U.S. operations atGuy Carpenter. “The challenge in facing emerging risks such ascyber-attacks or terrorism, where there is less of a historicalprecedence and data available, rests in modeling and quantifyingthe potential impacts. Assessing and managing current and futurerisks will continue to be critically important for the industry torealize its growth objectives.”

While cyber security concerns are among the top risks, thefindings also reveal that new products, expansion into newgeographic markets and access new distribution channels will be theprimary drivers of profitable growth in 2015.

Looking forward, 40% of survey respondents believe the biggestopportunity to expand their businesses in 2015 will be through newproducts, an increase from only 24% in 2013. Twenty-three percentof respondents cited expanding into new geographic markets as beingthe top driver of profitability, but considering this was the topresponse in last year's survey, it has become significantly less ofa priority. New products and geographic expansion were followed bynew distribution channels and mergers and acquisitions at 17% and14% respectively.

Alternatively, the survey findings this year once again citeundisciplined and unprofitable underwriting as a leading threat toplans for growth in the year ahead (30%). Concerns surrounding theeconomic stagnation of the U.S. and countries abroad, as well asregulatory changes, are also on the rise. Nearly a quarter ofrespondents claim regulatory and rating agency changes are thebiggest threat to their plans for growth, while 19% are mostconcerned about global economic uncertainty, which is up from 12%in 2013.

With relatively low insured catastrophe losses coming at the endof the Atlantic Hurricane season, only 19% of respondents citedcatastrophe/non-cat losses as a leading threat to future plans,which is on par with responses to last year's survey. At the sametime, 11% of respondents believe operational inefficiencies are theleading threat to their business, which is down from 15% in2013.

Overall improvements to technology and a focus on identifyingand retaining talent continues to be a main priority for(re)insurance professionals. The survey results show that more thanone in three respondents would spend additional resources on talentand retention, if given a blank check to invest in their firm.Bolstering information technology is also a top priority for theindustry, as 37% of respondents claim that they would allocate ablank check to this area of their business.

“The insurance industry continues to see significantopportunities to aggregate and analyze massive amounts of data andharness this information quickly to respond to changes in themarket and gain a competitive advantage. Big data without analysisand interpretation, however, is just noise. This is where havingstrong talent and strategic partners becomes critically important,”Marcell said. “At Guy Carpenter, we will continue to invest in ourindustry-leading analytics, strategic advisory services andspecialized reinsurance broking expertise to help our clientsrealize the enormous potential of big data that will, in turn,enable them to grow profitably.”

The survey was conducted by Guy Carpenter at the 2014 PCI AnnualMeeting held in Scottsdale, Ariz. from Oct. 26 through Oct. 29. Thesurvey polled 111 insurance and reinsurance professionals. The 2013survey, for comparison, polled 115 professionals.