Private Capital versus Public Capital

06 March 2018 | Blog Post

On the surface, the global economy seems to be in good shape. Growth across most of the developed economies is up along with other indicators such as employment. Yet, below the surface, the picture is far murkier. For there is a growing tension between connected risk and opportunity that has the potential to undermine the global economy.

On one side, is dwindling public capital as Governments emerged out of the 2008 financial crisis saddled with large debts. Pitted against public capital is a growing private wealth. Wealth reflected in the likes of Amazon, which possesses nimbler business models.

Risk has always been shared across both the public and private sectors. It is only in the digital age as we enter a new era of liability, however, that we are beginning to understand both the emerging challenges and opportunities that governments, insurers and corporates can leverage to their advantage

Some of the challenges facing policymakers can be traced back to the 2008 financial crisis, which ended a time of ‘light-touch’ regulation and signalled an era of new government policymaking priorities. A new approach to policymaking needs to be fostered by Governments that recognises the need for large capital requirements such as Solvency II while being sympathetic to the era of Digital 2.0.

At the same time, whilst policy reform has been driven by shocks to the global financial system, there is an increasing external thirst for capital investment that is being choked off by dwindling Government coffers. Consequently, across all global economies, capital earmarked for infrastructure development fell dramatically, despite both the voter and business demand for long-term investments.

Therefore, despite the worldwide economy picking up in 2018, it is clear there is an infrastructure gap, raising the question: “Is there enough capital available to the bridge the divide between Government austerity and voter/business growth imperatives?”

In this white paper, we explore the tension between private and public capital, the connected risk, and the implications for policymakers and corporate asset holders across industry verticals and geopolitical territories.

Leviathan Versus the Masters of the Universe: The battle between Public and Private Capital in the Connected World White Paper can be downloaded here.

Corporate Risk, Corporate Risk Managers, Emerging Risk, Enterprise Risk, Financial Services, Insurance, Political Exposure, Re/Insurance, Risk Manager, Risk Modelling, Supply Chain Exposure

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