The term “Fourth Industrial Revolution” (4IR) first shot to prominence when it was the theme of the World Economic Forum (WEF) in Davos last year, and it was the subject of a short book by WEF founder Professor Klaus Schwab. It is an emerging buzz phrase among technologists, futurists, big data scientists and the digital cognoscenti. But to most people, it remains a relatively unknown concept.
So, what is 4IR all about? It is characterised by the blurring of cyber, physical and biological networks to create autonomous systems. It portends man and machine working alongside each other and machines talking to machines (M2M) to continuously refine their operations without human input. Some of the precursors of those concepts are here now. Consider virtual personal assistants such as Siri or Alexa, augmented reality, deep learning algorithms, and Google’s Neural Machine Translation System which created its own “interlingua” for translation purposes.
These changes are happening exponentially. Indeed, simple examples are already all around us: autonomous vehicles becoming more widely accepted and smart thermostats controlling home temperatures based on geo-fencing algorithms driven by the GPS location of owners’ smartphones.
To put the evolutionary process in basic context, the first industrial revolution in the 1780s was characterised by dramatic changes resulting from the advent of steam and water power. The second in the late 1800s was sparked by the introduction of electricity and the production line. The third — and interestingly upon which the ongoing fourth revolution is built — brought us electronics, computers, software and digitisation.
This 4th industrial revolution will bring changes we can barely conceive today. At Davos last year, it was estimated that 65% of current primary school children will ultimately be employed in jobs which do not yet exist.
While much of the future is unclear, we can extrapolate some of the advances. For example, smart M2M warehouse factories with self-configuring and self-optimising processes will imminently be operational. Soon, they will communicate much more effectively with both supply chains and consumers, improving efficiency, productivity, agility and choice across entire value chains of products and services.
It is highly likely medical devices can be implanted subcutaneously to supply information on people’s health and wellbeing – day by day, second by second – with all sorts of implications for individual and societal healthcare. Similarly, buildings, and the discrete systems and machinery within them, will feed back information on every structural and functional aspect to ensure optimal and synchronized operations. The data can also be invaluable in the event of malfunctions or catastrophic events, providing timely perspective on how assets truly react under stress; and thus significantly improving the development of “real world” vulnerability curves.
Implicit in the Internet of Things (IoT) paradigm is that almost everything will be connected and streaming data. Volumes of accessible data are already overwhelming and will increase exponentially. However, intelligence augmented (IA) solutions are also evolving rapidly and will make the capture of data — and the generation of impactful insights from data — significantly easier.
As history reminds us, every industrial revolution has created profound social changes. The 4th industrial revolution will be no different. The gap between those called the “thinkers” (high skill/high pay jobs) and the “doers” (low skill/low pay jobs) could widen considerably. There could well be a significant change in the nature of “jobs,” with many people having to retrain. This trend has already started. Aviva recently polled 16,000 staff, asking if they felt their jobs could be fulfilled as effectively by a robot. Those staff who answered “yes” will be retrained for different roles within the company.
Despite such developments, the consensus amongst 4IR commentators is that, freed from many day-to-day tasks, the general population will have more leisure time. And we’ll be healthier, with improvements in the quality of life as well as longevity (a combination known as senescence). Much of this will depend in part on how quickly and adroitly governments, policy makers, regulators and businesses adapt to the forthcoming challenges. It looks like all elements of our ecosystems will need to reimagine their linear, top-down approach to the nature of work and productivity, and shift to a much more agile form of management and governance to keep pace with the exponential changes already underway.
How can the insurance industry come to grips with 4IR?
Understanding and addressing the phenomenon of 4IR is a prime challenge and opportunity for the re/insurance ecosystem. Insurance organizations need to consider their approach and partner with companies who can:
- Help them make sense of the tsunami of data that is coming their way
- Re-engineer and refine their operational processes to improve efficiency and productivity
- Short cut their knowledge gap of Robotic Process Automation (RPA) and Intelligence Augmented solutions (IA)
- Rationalize and accelerate integration with the Internet of Things (IoT) elements
Let’s explore the issues you face now and in a future that’s exponentially compressed by the impacts of the 4th industrial revolution.
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