By Bob Davis
A new survey of risk managers names China as the number one “emerging risk” that keeps them awake at night.
Fourteen percent of the 141 respondents to the survey of corporate risk managers and actuaries by the Society of Actuaries, an industry association in Schaumburg, Ill., named “Chinese economic hard landing,” as their top concern for the future. Number two, at 11%, was a sharp fall in the U.S. dollar; number three was a “blow up in asset prices.”
An oil price shock was number four, at 9%, but that number would probably have risen higher if the survey was taken today, given the rapidly spreading political revolution in the Middle East, said Max Rudolph, an Omaha, Neb., actuary who ran the survey.
The survey was conducted in October and November 2010 and is due to be released shortly. A copy was provided to the Wall Street Journal.
“A Chinese economic hard landing would have most unintended consequences if it happened,” Mr. Rudolph “It’s never happened so you don’t know the impacts it would have.”
What was especially striking was how much more concerned the risk managers were about China in 2010 than the year before, when only 4% chose China as the top emerging risk. During that survey, the fall in the U.S. dollar and asset bubble crash dominated the risk managers’ concerns. The survey presents 23 possible risks for the respondents to rank, including climate change, international terrorism and pandemics, as well as economic concerns.
“In my mind, China is growing much more in the consciousness of people as we get further away from the economic crisis of late 2008,” said Mr. Randolph. “Managers are saying ‘Got that risk under control, so I need to think about next risk’” to plan for.
“They are viewing China as something they need to be aware of and monitor,” he said.
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