The world is about to embark on a fourth industrial revolution, propelled by innovative technologies termed as the “Smart Factory.” The real world will be turned into a huge information system bringing about a new paradigm in industrial business models affecting supply chains, transportation systems, and labour skills. With the Smart Factory still in its infancy, it is difficult to envisage exactly the scale and speed of its impact on the global economy.
The interdependence of processes embedded in the Smart Factory concept will present significant challenges from a risk management perspective. The complex and information intensive nature of the Smart Factory is likely to drive changes in customers’ insurance needs and the insurance industry will face a demand to build tailored solutions for the residual risks.
This paper looks at the drivers shaping the rise of the Smart Factory, some of the risks management implications these developments pose for our customers, and, considers in broad terms the ways in which the insurance sector can assist with appropriate risk mitigations, while recognising that not all risks will be insurable.
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