The New Perfect Storm?

We received the latest Bubble Bulletin newsletter from the Society of Actuaries (SOA) last week and it was, to say the least, “hair raising.”   According to the report,

Actuary Shaun Wang, a leader in enterprise risk management, and founder and Chairman of Risk Lighthouse LLC, warns of a “perfect storm,” a combination of natural disasters on a scale even larger than the Japan earthquake coupled with a second-dip market meltdown greater than the 2008 financial crisis.

Wang cautions businesses, particularly insurers, and governments to take heed and prepare for the systemic threat that a natural disaster-triggered market meltdown presents to the U.S. economy.

As if the markets aren’t dealing with enough macro swans already,  the report goes on,

Warnings of the Impending Storm are Visible:
• Four of the five costliest earthquakes and tsunamis of the last 30 years have occurred in the last 13 months. Conditional probability of an earthquake in the northwest U.S. has increased significantly due to changing pressures on crustal plates.
• The world is on the brink of a severe shortage of food and water. Thanks to a new peak population of nearly seven billion, demand is outpacing supply. Severe drought and water scarcity would affect food availability and cause spikes in food prices.
• Warnings of solar flares from a “huge space storm” came to fruition on June 7, when NASA reported a potent blast from the Sun causing a firestorm of radiation on a level not seen since 2006. Flares such as this have the potential to disrupt satellite communications and power on Earth

Scary stuff and to think this is what analysts at insurance companies are looking it?  Gulp!

The perception of such a scenario is not even close to the market radar.   Alarmist?  Six sigma event?   We don’t know, but do suggest you have a look at the bulletin, think about it,  and closely monitor the data for yourself.

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