Physical and institutional ‘risk corridors’ are reshaping the way risk emerges and spreads through the global economy, presenting a new challenge for insurers and pension schemes, according to the Institute and Faculty of Actuaries (IFoA).

Authored by Cat Drummond, Daniel Sacks, and Charl Cronje from LCP’s Insurance Consulting practice, the ‘Hidden Corridors’ thought piece explored the evolving nature of risk in a world where key systems are deeply interconnected.

It highlighted how actuaries and risk professionals can support better decision making while facing material uncertainty.

The report said economies were reliant on the continuous movement of resources, information, and capital through a relatively limited number of routes, infrastructures, and networks, with these corridors being physical and institutional.

Five key corridors that underpin economic and social stability were highlighted: food, water, energy, connectivity, and finance.

The IFoA noted that while these systems appeared to be resilient in normal conditions, they were often concentrated and dependent on a small number of pathways, and disruption in one pathway can quickly leak into another, amplifying impacts.

It warned this had direct implications for pension schemes and insurers, with disruption to key corridors potentially feeding through to inflation, growth, credit quality, asset valuations and investment performance, while also testing operational resilience across financial institutions.

Risk in these systems was not just about likelihood and severity, the paper warned, and it was increasingly dependent on how quickly disruption occurs, how events interact, and how far the effects spread across interconnected systems.

Risk professionals were urged to adopt a more integrated perspective, as the challenge cut across traditional risk categories.

The report said actuaries and risk professionals could support better decision making by identifying concentrations of risk where dependency is greatest; assessing potential impacts using models, scenarios, and expert judgment; testing resilience by exploring how systems respond to stress; and highlighting trade-offs between efficiency, cost, and resilience.

“The IFoA’s ‘think’ thought leadership series aims to inspire new ideas and encourage meaningful discussion on the issues that matter most — both for actuaries and for society as a whole,” said IFoA president, Paul Sweeting.

‘Hidden Corridors' considers how modern life depends on systems that are deeply interconnected such as food, water, energy, finance and more.

“We hope this thought-provoking piece helps organisations, policymakers and risk professionals think more clearly about how disruption spreads across those systems and affects economic activity and social stability.”

LCP partner, Cat Drummond, added: “Building clearer pictures of how these systems function, where they are concentrated and how they may respond under stress can support better decisions.

“Actuaries and risk professionals can contribute by helping to communicate these risks in a way that is accessible, grounded and relevant, making clear what is at stake. Risk does not sit neatly within individual systems. It emerges from how those systems connect, and how they behave under pressure.”

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