Horizon scanning Smart factory, new risks and smart solutions

Transcription

1 Horizon scanning Smart factory, new risks and smart solutions 18 May 2017 Lucio Silvio Casati Head of Zurich Risk Engineering Italy Zurich Global Corporate Italy

2 Visionary Mr. Isaac Asimov 2

3 Asimov Robots can t be dangerous: the Three Laws of Robotics 1. A robot may not injure a human being or, through inaction, allow a human being to come to harm. 2. A robot must obey the orders given it by human beings except where such orders would conflict with the First Law. 3. A robot must protect its own existence as long as such protection does not conflict with the First or Second Laws. 3

4 Professional visionary Smart future and futuristic visions Mr. Carlo Ratti Massachusetts Institute of Technology (MIT)Director of MIT Senseable City Lab is an architect, engineer, inventor, educator and activist who is designing the future of the connected city The idea of the smart city is linked to the convergence of the digital and physical worlds; smart city is a city that leverages digital intelligence to improve citizens lives. 4

5 Smart future Let s focus on the driverless car is a metaphor of more complex situation The adoption of self-driving vehicles promises to dramatically reduce the number of accidents: Safety and full traffic rules compliance In spite of it is perceived as a promising technology, there still be the risks to decisionmaking, security and governance («trolley dilemma»): defining the algorithms that will guide self-driving vehicles in emergency situations would require to take decision affecting moral and ethical side as well as legal implications (i.e decision to run over pedestrians, to swerve into a passer-by, or to self-destruct..) 5

6 Smart future Everybody can play an active role in a future world «fully-smart» «smart» people «smart» houses and appliances «smart» services «driverless» vehicles Robotics, nanotechnology, cognitive computing, self learning algorithms Internet of things is flooding the real world 6

7 Smart future Internet of things is flooding the real world It is a trend that can t be stopped but should be understood and managed in order to gain benefits and competitive advantages The Global Opportunity Report highlights that a big innovation effort is a fundamental prerequisite for future success This is the part of the full proactive concept of resilience 7

8 Smart future Innovation is a prerequisite for future success and business resilience Uber innovation effort means 300 M USD of financial budget Agreement with Volvo to develop a self driving car ready in 5 years More effective and even competitive services expected 8

9 Smart future Smart future in the industrial arena: Industry 4.0 Industry 4.0 is characterized by the increasing digitization, convergence of the virtual and physical worlds on value chains and business models, machine learning, automation of knowledge work and machine-to-machine communication with the manufacturing process Machines M2M robots will become more connected, everything will be communicating with everything else robots will become more intelligent and more efficient a huge mass of data will need to be managed by advanced software in order to increase productivity and efficiency. 9

10 Industry 4.0 «Smart factory» - the fourth industrial revolution XVIII century: water and steam power for machinery development XIX century: electricity and production lines, mass production XX century: use of electronics and IT for automation XXI century: digital revolution (Industry 4.0) 10

11 Industry 4.0 SMART FACTORY Analytical possibilities offered by the volume and variety of data will make easier optimization of industrial processes Graphic: Bosch 11

12 Industry 4.0 Robot and the big data: Audi will re-invent the manufacturing process Audi imagines the future factory everything will be communicating with everything else in an effective and coordinated way, like an orchestra 2035 A central control tower will dictate workflow and keep tabs on production, not just through information and technology systems, but also physically. Humans will be in the middle of the action with a panoramic view Source: Audi Innovative Thinking 12

13 Industry 4.0 Adidas re-invented the manufacturing process: «reshoring» and «speed factory» Production costs reduction Higher proximity between production plants and relevant commercial markets, minimization of delivery time Individual customer requests will be met more easily Short and easier logistics Reduction of transports and buffer stocks 13

14 Industry 4.0 Potential strategic benefits INCREASE Processes effectiveness Supply chain efficiency Market proximity (re-shoring) Knowledge of own systems Effective use of own assets REDUCTION Products defects Accidents, workers injuries Waste, emissions Transport Spares Better knowledge of customer needs Is it a risk free revolution? 14

15 Smart future Is it a risk free revolution? i.e. CURRENT driving risk: UK annual average probability of occupational fatality: FUTURE? Deep sea fishing 1 in 750 Coal mining 1 in 7,500 Car driving (40k km / year) 1 in 8,000 Construction 1 in 10,000 Agriculture 1 in 13,500 Service industries 1 in 150,000 15

16 Industry 4.0 Strategic benefits for many...but not for everybody Working conditions and employment will be touched too University of Oxford The future of employment: how susceptible are jobs to computerization? Technology at work. The future of innovation and employment 16

17 Industry 4.0 WEF Global Risk Report 2017 Global Risks Report is based on risk perceptions from within the World Economic Forum, different stakeholder communities and knowledge networks Its last release 2017 has a specific focus on emerging technology risk: governance dilemmas: how to govern emerging technologies is a complex question the potential of emerging technologies to disrupt established business models is large and growing technology can exert a multiplier effect on the risk landscape due to the deep interconnectedness of global risks Source: World Economic Forum, Global Risks Report

18 Impact if the risk were to occur (score) WEF Global Risk Report 2017 Top risks highlight increasing fragility of society Water crises Natural disasters Extreme weather events Fiscal crises Food crises Unemployment or underemployment Failure of climate change mitigation and adaption Interstate conflicts Terrorist attacks Cyber attacks Likelihood to occur over the next ten years (score) Large-scale involuntary migration Economic Environmental Geopolitical Societal Technological Source: World Economic Forum, Global Risks Report

19 Industry 4.0 But WEF Global Risk Report shows that interconnected risks are amplified by global trends There are sentinel alerts driven by 4 th industrial revolution More complex interdependencies Vulnerability of critical infrastructure Potential for greater disruption from business interruption Vulnerability to «cyber attack» Loss of critical information and data Growing unemployment Potential social instability Are we able to imagine the Global Risks Report picture 2027? 19

20 Industry 4.0 Social systems, essential for social stability, will be threatened by 4 th industrial revolution Systems already strained Demographic pressures are further threatened by the 4 th Industrial Revolution Moving to a sharing and collaborative economy Persistent low interest rates Untethering some types of work from a physical location Mass migration of labor Displacing human labor by automation, robotics and artificial intelligence Source: World Economic Forum, Global Risks Report

21 Negative consequences Industry 4.0 WEF Global Risk Report looks at the risks to decision-making, security and governance as well as resilience to the impact of automation. Emerging technology risk landscape average Geoengineering Blockchain and distributed ledger Virtual and augmented realities Proliferation and ubiquitous presence of linked sensors Space technologies Benefits Neurotechnologies average 3D printing Artificial intelligence and robotics Biotechnologies New computing technologies Advanced materials and nanomaterials Energy capture, storage and transmission Source: World Economic Forum, Global Risks Report

22 Industry 4.0: smart factory The risk will not disappear but at least change! Complex interdependencies among processes (i.e. supply chain) High vulnerability of critical infrastructure (i.e. industrial control systems) Potential for greater disruption from business interruption (in a business model mainly driven by data, each interruption, although short, could generate relevant impacts too) Difficulties in determining liability for losses Difficult protection of data (customer data violation, cloud computing, reputational impact) Increasing vulnerability to «cyber attack» (loss of data, damages to assets, products defects/tampering, business interruption, vulnerability of intellectual property, extortion etc) 22

23 Industry 4.0: smart factory The risk does not disappear but only change! The risk profile could have a different shape Risk scenarios with low probability BUT high severity Traditional risk management techniques and transfer could be not fully appropriate Past loss experience may become less representative of future loss potential. On behalf of the new universe of risks, insurance carriers and risk engineering providers are requested a big effort of innovation and adaptation to manage new landscape new emerging needs new products and services 23

24 Industry 4.0: approach will be different from the past. Let s focus again on the driving risk management CURRENT Motor fleet risk management based on a 3-dimension analysis: driver (attitude) journey vehicle Motor fleet risk management mainly focused on driver-less car and relevant electronic and safety devices Innovation updating maintenance reliability FUTURE?

25 Industry 4.0: smart risk management Imagine, awareness, understanding and assess of risk landscape: risk engineering contribution Extreme complexity of processes: complex determination of responsibility among players Professional indemnity exposures understanding and assessment, knowledge of legal theories Skills on contractual agreements High vulnerability of critical assets and infrastructure Analysis and study of protection systems specific for critical assets development of tailored contingency strategies Long chains with an high number of interconnected operations and partners Deep interdependency exposure analysis, supply chain risk understanding and assessment BI and CBI scenarios estimation Cyber attack and data protection: Cyber and data vulnerability assessment Cyber defense study Physical security strategies development Source: World Economic Forum, Global Risks Report

26 Industry 4.0: smart risk management Effective Risk engineering and management approach needs of. NEW EXPERTISE Tailored training and skills in specific emerging sectors and risks Knowledge sharing TAILORED TOOLS Tools for interdependency analysis (i.e. BI modelling) Tools for supply chain analysis Methodology for analysis of complex environment (i.e. ZHA) AGILE and ADAPTATIVE MINDSET innovation curiosity more inductive attitude (rather than deductive ) 26

27 Industry 4.0: smart factory Risk transfer approach will be different from the past.based on deep knowledge Some insurance coverages could become less strategic Workers compensation Product liability General liability Environmental liability Further insurance coverages could have a growing importance: Professional liability Cyber security (third party liability, crisis management costs, loss of revenues, extortion) Contingent business interruption / interdependency Protection of key assets / critical infrastructures Supply chain (financial impact on business continuity driven by losses of supply chain, outside the area of company control) Performance (financial losses driven by company errors and omissions) 27

28 Industry Smart factory Moving from «know how» to «know why» The concept of «Industry 4.0» is an innovation and change challenge for all involved players but it is not risk-free The concept of «know why» will be important In the smart future knowing how to do things can t be enough, if you are not able to understand reasons, root causes and mechanism at the base of risks, thus able to find solutions For all companies it is important increasing a deep knowledge of own production chain to gain significant competitive advantages For insurance and risk engineering community it is important increase a deep technical knowledge of customer emerging risks, processes, value chain and needs in order to propose further more specific and calibrated solutions 28

29 One day the machines will be able to solve all problems, but none of them can deliver us one. Albert Einstein 29

30 Thank you Lucio Silvio Casati Head of Zurich Risk Engineering Italy Zurich Commercial Insurance Italy 30

31 The information contained in this document is intended as a general description of certain types of services and insurance covers available to qualified customers. Zurich Insurance Company Ltd or any of its subsidiaries and its employees do not assume any liability of any kind whatsoever, resulting from the use, or reliance upon any of the information contained herein. It does not replace or complement your individual insurance policy, which is the only source for terms and conditions of your respective insurance cover. This is intended as a general description of certain types of services and insurance covers available to qualified customers through subsidiaries within the Zurich Insurance Group Ltd. including, in the United States, Zurich American Insurance Company, 1299 Zurich Way, Schaumburg, Illinois 60196, and, in Canada, Zurich Insurance Company Ltd, 100 King Street West, Toronto ON M5X 1C9, and, outside the US and Canada, Zurich Insurance Plc, Ballsbridge Park, Dublin 4, Ireland (and its EU branches), Zurich Insurance Company Ltd, Mythenquai 2, 8002 Zurich, Zurich Australian Insurance Limited, 5 Blue St., North Sydney, NSW 2060 and further entities, as required by local jurisdiction. 31