Gallagher Global Open

    October 2023

    Executive summary

    Welcome to the Spotlight Podcast, a new series of conversations with risk specialists both within and external to the Gallagher business. The series takes our subject matter experts on a deep dive into many of the themes covered in the Spotlight thought leadership series, including the evolving risks and opportunities around geopolitics, climate change, technological advancements and regulation.

    In this first episode, our host Helen Yates talks to economist Markus Kuger about the risks and opportunities surrounding the shift towards cashless economies.


    Hello and welcome to the first episode of the Spotlight Series podcast, where we present insights and perspectives on the evolving risk landscape and the drivers of change impacting the world of our colleagues, customers and communities.

    During this episode, we take a deep dive into some of the risks associated with the shift towards cashless societies.

    In many countries we have seen an acceleration towards digital financial systems and there are a number of advantages to be gained, including greater convenience and a reduction in crime.

    But risk and opportunity are a double-edged sword and resilience should not take a backseat to efficiency. For this reason it can be helpful for risk professionals to test their business continuity plans against a range of potential risk scenarios.

    To tell us more, I'm joined by economist Markus Kuger.

    Markus Kuger: Cashless societies obviously come with efficiency gains and holding cash costs money and all of that will no longer be required. There will be a handsome cost savings, certain types of crime will die out.

    In Denmark, for example, they didn't have any bank robberies last year. That is especially stunning when you compare it with 20 years ago, when there was a bank robbery every week in what is a relatively small country.

    Going cashless increases the safety for certain businesses and also make it much harder to evade taxes. I'm sure organized crime will find a way around that, but at least in the short term it will make life much harder for criminals.

    Those are the advantages, but as I've mentioned, there are some disadvantages as well.

    We could get into some kind of Big Brother is watching you scenario. Governments and private companies will get a much better oversight into what consumers are using their money for.

    And while going cashless will be beneficial for certain types of crime, it certainly isn't good from a cybercrime perspective, which is the modern way of robbing a bank.

    Power outages and cloud outages are already problem, and they will be a bigger problem if we go cashless.

    The risk of a sustained power outage in the developed world is low, but we've seen in recent months and years that they do occur and when they occur.

    New Zealand was hit by storm earlier this year for instance, which caused widespread outages, especially in the North Island and the power outages that were caused by that storm lasted up to 10 days. The problem here is that without electricity, you won't be able to pay for goods.

    Cloud outage risk is a worrying area in a cashless society. The frequency of cyber-attacks is increasing and it's not only criminals that are involved in that, it's also rogue states. Russia and Korea, for example, are very active in this field.

    Certain parts of society will also face severe adjustment pain.

    While most of us have already adjusted to cashless payment methods to a certain degree, there are still segments of society that have not. The elderly, for instance, ethnic minorities, as well as the underprivileged.

    Keep an eye out for our next spotlight discussion. In the next episode we'll be looking at the risks surrounding biometric data capture and reflecting on a series of milestone settlements for alleged breaches of the Illinois BIPA Act.

    Crucially, we will be unpacking what this means for clients' exposures, and what questions they should be asking their insurers and broker partners.

    Thanks for listening.


    CONDITIONS AND LIMITATIONS Gallagher's global operations, including a network of correspondent brokers and consultants, offers client-service capabilities in more than 130 countries around the world. This report and supporting information is not intended to provide legal or financial advice and reflects our understanding as of October 2023. It should not be regarded as a comprehensive statement of the law and/or market practice in the regions covered. You should not act upon information in this publication nor determine not to act, without first seeking specific legal and/or specialist insurance and risk management expertise. Should you require advice about your specific insurance arrangements or claim circumstances, please contact your Gallagher account representative.

    © 2023 Arthur J. Gallagher & Co.