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Can Cities Meet Needs of Tomorrow?


By 2045, as many as 6 billion people are expected to inhabit urban areas, an increase of 150% on today.

With such rapid and vast growth, there are a number of key areas where the strain is most likely to be felt. Take London as an example. By 2050, demand for public transport in London is set to increase by 50% and demand for energy by 20%. Demand for water will already exceed supply by 10% by 2025, according to the office of the mayor of London. Meanwhile, half a million new homes will need to be built every year to house the rising population — but current planning restrictions mean the city is running out of space to build.

If these rising challenges are not met, there is a growing danger that some cities may cease to function, which could have serious implications for the global economy. Overloaded transport systems will lead to gridlock. Energy shortages could lead to blackouts. Lack of water could lead to disease.

McKinsey estimates that just 600 urban centers generate 60% of global GDP, while rising urban areas in the developing world have been driving 35% of global growth. If these economic powerhouses are hit by shortages in key areas, the world could be plunged into one of the worst recessions it has ever seen.

This is not a distant challenge — many of the problems are already being felt today with overloaded public transport systems, rising urban rents and water shortages in cities across the world. With the complexity and cost of urban infrastructure projects, governments and businesses need to plan for and act on these emerging risks today to meet the needs of tomorrow. Below, we run through some of the challenges and proposals in some of the key areas where urban areas are set to feel the strain. But this is far from an exhaustive list.



Without effective ways to move people and goods through urban areas, transport systems become effective blocks to, rather than facilitators of, commerce. But transport infrastructure projects are among the most complex, expensive and lengthy to undertake. In urban areas, such projects become even more difficult. Adding new (or expanding old) routes may involve buying/demolishing existing properties and serious disruption to existing infrastructure during the construction work.

The London Transport network (not including private journeys by car or bike) hosts around 24 million journeys a day. Projected to increase rail capacity by 10%, the city’s Crossrail project is expected to be fully operational in 2019. Yet, by 2030, the city is expected to have a population of 10 million — an increase of 16%. Despite being Europe’s single largest construction project, costing more than $22.5 billion and taking more than a decade to complete, Crossrail still won’t be enough to meet the city’s needs. Simply building more railways and roads may not be enough to keep our cities moving.

To reduce congestion, some cities, like Oslo, are thinking of banning private cars from their roadways. Through a one-day trial in September 2015, Paris found alternative types of transportation such as biking could reduce air pollution. Would the reduction in traffic lead to sufficient benefits for the population as a whole, or would it simply make cities more inconvenient for individuals? This sort of reduction may work in small, compact urban areas — but it’s by no means a solution for everyone. This is why some cities (like Sao Paolo and Athens) have also introduced systems to prevent the use of some cars on certain days. But, as cities sprawl and populations rise, limiting cars on roadways might not be a simple answer to the needs and complexity of the transportation systems of the future.

Utility and Food Supply, Waste Disposal

Growing enough food for a global population expected to hit 10 billion by 2050 is tough. Add in the need to get this food to the people who need it, in urban areas often far away from the food’s place of production, and the challenge is compounded.

Reducing road traffic in cities by banning private cars may increase the ability of commercial trucks to deliver food to shops, but getting the food to those cities in the first place remains a serious challenge. Many major urban airports are nearing capacity, while skies are more congested than ever — despite flight path efficiency and coordination improvements such as those driven by the European Union’s Single Sky project.

Larger cities will need more airports, more shipping and more (or more efficient) transport links from airports and seaports to those cities. To provide water for drinking and industry, new and bigger reservoirs and expanded networks of pipes will need to be constructed — assuming there is rainfall to fill them, which is far from certain. And it’s not just about getting material to cities; the volume of waste products will also vastly increase. Packaging will need to be collected and taken away for recycling, incineration or alternative disposal. (The increased volumes of human waste will require more sewers and more sewage treatment plants.) Some solutions aim to tackle two problems at once, turning household waste and even human waste into electricity. Meanwhile, many cities, including London, are investigating recycling water, feeding used water back into the system after treatment.

Increased electricity needs could be met by efficiency improvements in energy generation or by building more power stations (projects that can take years). But some are proposing a radical rethink: moving away from the concept of urban energy grids into more localized power generation. Emerging technologies like solar roadways and solar cells that double as windows — or even maximizing the energy of waste heat from machinery and electronics, combined with improvements in battery storage — could bring energy generation to the point of use and reduce the need for nation- or citywide power networks. While many offices and factories already have back-up generators for emergencies, some hope the right combination of alternative electricity sources, including from on-site waste, could enable them to become off-grid and self-sufficient permanently.

The End of the City?

With cities growing at such a rapid rate, is there a simpler solution to the challenge? Moving away from the city? This could solve the added problem of the increasing lack of housing in urban areas, while creating jobs in areas that traditionally have lower costs of living.

With the prevalence of ecommerce and increasingly robust home delivery options, there is no longer a reliance on the “city” for commerce as there was in times passed. This could also help meet the rising demand for better work-life balance and flexible working.

As telecommuting options are embraced by more employers and workers, justifying a traditional “office” environment becomes harder. Combine this with the increasing strains on urban infrastructure and rising costs of maintaining office buildings and perhaps a shift to home offices could solve three problems at once: reduce the pressure on urban areas, improve workers’ quality of life and cut costs for businesses.

There are no easy solutions. But as businesses seek to maintain their competitiveness and attract the workers they need to adapt and evolve, it is becoming increasingly essential to consider not just what your organization does, but where — and how — it should be doing it. Do you have plans in place to cope with the emerging challenges of urban living and working?

Talking Points

“By 2050, the world will have grown by 2.5 billion additional urban dwellers, with almost all of this growth occurring in cities in the developing world.… The world will need to invest about $50 trillion in infrastructure every year for 15 years to keep up with demand.” – Aniruddha Dasgupta, global director, World Resources Institute Ross Center for Sustainable Cities

“The question of how to enhance mobility while at the same time reducing congestion, accidents and pollution is a common challenge to all major cities in Europe. Congestion in the E.U. is often located in and around urban areas and costs nearly EUR 100 billion, or 1% of the EU’s GDP, annually.” – European Commission

“This is not a third-world problem alone. Nice icons of sustainability, like Portland… have combined sewer outlets. They do get floods on their streets, and sometimes they are made up of sewage as well as rainfall. It’s an under-the-rug kind of issue that people in charge don’t talk about. We’re here to say that everything is not OK.… We need to find a way to build a new approach to an old problem.” – Mikhail Chester, assistant professor, Arizona State University School of Sustainable Engineering and the Built Environment

Further Reading

The Costs of Inaction on Encryption

Alarm systems have a long and varied history — from geese in ancient Rome, to noise makers that announced the presence of an intruder, to present-day electronic sensors and lasers. Originally, the creation of alarms was driven by the psychological need all humans have to establish a safe environment for themselves. Today, that same need exists, but it has been extended to include other concerns, such as valued personal possessions, merchandise and intellectual property. In the cyber realm, security is as important as it is in the physical world because people must be able to feel secure in their ability to store sensitive, high-value data. Without that sense of security, the cyber realm would lose almost all of its relevance.

Cybersecurity is established by various hardware and software components, but none of the components are more essential than strong encryption. It is such encryption that keeps bank transactions, online purchases and email accounts safe. However, there is a disturbing worldwide governmental trend to weaken encryption, which was exemplified in the legal disagreement earlier this year between Apple and the U.S. government. While there are definite aspects of the dispute that fall outside of the professional insurance sphere, there is an undeniable part of the battle for strong encryption that the professional insurance sector must not fail to acknowledge and address. The outcome of this struggle will be felt well into the 22nd century, and, perhaps, at least in the business arena, the outcome will be borne most keenly by cyber liability and technology E&O insurers.

With global attempts to reduce the effectiveness of encryption, no insurer can claim it lacks a part in the effort for resilient and ever-evolving encryption and cybersecurity measures. The Chinese government is not a supporter of privacy, and it has even hacked Google’s Gmail service and the Dalai Lama’s email account to gain access to information it has deemed disruptive. It also has been stepping up its “investigations” into products produced by U.S-based technology companies. Furthermore, after both the 2015 attack in Paris and the 2016 attack in Brussels, the debate regarding whether encryption should be allowed was re-ignited in Europe and the U.K. Recently, the French, Hungarian and British governments have made various attempts at weakening or removing encryption. Therefore, with this global challenge facing insurers, they are required to be completely aware of what is at risk for them, and they must help pave a path forward that endeavors to balance profitability of products (like cyber liability and technology E&O) with the protection those products should afford any insured.

See also: Best Practices in Cyber Security

Apple, perhaps, serves as the best example of how governmental interference with cybersecurity is an issue that requires direct and immediate intervention from insurers. There are thousands of businesses around the world that rely on the iPhone and iPad for productivity purposes — and almost all of those businesses also rely on the security that those devices provide, both from a hardware and a software standpoint. Recently, the U.S. government attempted to force Apple, in different judicial battles, to write code that will allow the government to have a master key to access the data of any iPhone. However, the U.S government is also pursuing a legislative avenue to pass a law that will force U.S. companies to give the U.S. government unfettered retrieval of any data on which it sets its sight.

To provide such access would almost always require companies to write software code that is purposefully compromised from a security standpoint. It would be extremely unwise for professional insurance companies to assume this disagreement is only between the technology sector and world governments because, if there is an outcome favorable for the U.S. government, it will have direct and immediately negative effects on insurers that offer cyber liability and technology E&O insurance in the U.S., and it will set a dangerous precedent that will embolden other governments to justify similar breaches that will allow them to acquire what should be secure data.

From a cyber liability standpoint, any vulnerability in software code gives hackers another way to compromise a victim’s computers and network. If a company like Apple (which has thousands of businesses depending on it to keep them safe) has to create a master key, then all of the businesses that use Apple products will be vulnerable to attack. The U.S. government has a long history of being unable to keep its own data safe, which means, in time, hackers will be able to figure out what entrance point was created and then exploit it. The most worrisome entities that might access the backdoor would be non-democratic nation-states because they have the most to gain from exploiting any vulnerabilities in U.S-based companies. However, such companies are not the only ones who use products produced by Apple, which means companies located anywhere would also be vulnerable. Additionally, if world governments put restraints on encryption to make it illegal or to limit the ways data can be encoded then, again, that gives power to those entities that would exploit weak encipherment to the detriment of the private sector.

From a technology E&O standpoint, any request by the U.S. government to weaken products produced by an insured creates a breach of contract, which will hurt claims made against technology E&O policies. If Foxconn, which builds the iPhone for Apple, was forced to alter firmware used in the iPhone to allow at least one software flaw, then Apple could sue Foxconn for a breach of contract were Apple to learn of Foxconn obeying a government order to create a security bypass in the firmware code. Worse yet would be a company like FireEye being forced to reduce the effectiveness of its virtual execution engines that are at the heart of its malware analysis appliances. FireEye, and other cyber security companies, are what often stand between a hacker and its victim. Should a cybersecurity company ever be forced to obey a government order, little would stand between a hacker and its potential victims. Moreover, all of the companies that depend on the products of a cybersecurity company would also be in a position to bring claims against the insured organization, which would certainly be detrimental to technology E&O insurers.

To defend itself and its products from government interference, Apple is implementing a security feature that removes its ability to bypass the iPhone’s security. While such method works from a simplicity standpoint, it will not work for a majority of technology companies, with cybersecurity and cloud providers being two examples of where such a solution would not work. Additionally, if a law were passed that forced a company by way of a court order, for example, to decrypt information on its products, then the company so ordered would be put into a bind. Cyber liability and technology E&O insurers could also add exclusions to policies that would void insurance contracts if an insured organization complied with a governmental request to create a backdoor.

However, it would be extremely difficult for an insurer to prove the backdoor was created deliberately, and, ultimately, such exclusions would be ethically ambiguous given they would punish an insured firm for obeying the rule of law. Companies could also contest each governmental request, assuming no law makes it illegal to deny a government request, but not all companies have the time or financial resources with which to fight a government. The only reasonable avenue to rein in disruptive governmental orders, then, is for insurers, technology companies and others to unite and block any legislative attempt to pass a law that would force any technology company to create a security gap. Moreover, the resistance movement will also need to fight against any attempt to weaken or make illegal any type of encryption.

See also: Paradigm Shift on Cyber Security

Currently, the relationship that exists between the insurance and technology sectors is that of provider and client, but that relationship must now evolve into a partnership. The technology sector cannot afford to go without cyber liability and technology E&O insurance because almost every company needs to offset technological risk now that we are in a globally connected and highly litigious age. Insurers also need to continue offering cyber liability and technology E&O policies because they have the clout and financial strength to help protect companies — especially small- and medium-sized ones — from an ever-changing technological landscape. Then, too, whichever insurer develops a realistic understanding of the intersection of risk and technology will be in a position to enrich itself.

The path forward, then, is to create a coalition whose first goal would be to stay on top of both pending and current judicial cases and bills being drafted or voted on in any legislature worldwide that would degrade the security strength of any member’s product. The U.S. government has recently tried to force Apple to create a master key to one of its product lines, and there is no reason to believe that it will not force other companies (like cloud providers) to build similar backdoors into their products. To work against such actions, the coalition might be composed of two representatives from each sector’s main representative organization. For instance, for the professional insurance sector that would be PLUS, and for technology companies that would be IEEE.

Furthermore, the coalition might also be composed of members from automotive manufacturers, educators and telecommunication firms. The coalition’s protective approach, then, would be to identify cases or bills and then attempt to bring all resources forward to eliminate or mitigate the offending threat. A recent example on the judicial side of a case that would have been a threat to the putative coalition was the Apple vs. the U.S. government in Central District of California, Eastern Division. A current example of a legislative threat to the coalition is the Burr-Feinstein Anti-Encryption draft that seeks to allow courts to order a company to decrypt information it has encoded, like the way the iPhone protects a user’s data.

In a judicial case, the main measure could be filing amicus curiae briefs on the part of the aggrieved organization, but another measure might be ensuring the defendant is crafting the most reasonably persuasive anti-governmental interference arguments and appealing unfavorable rulings. On the legislative front, measures might include lobbyists but, more importantly, ought to involve the unity achieved by the existence of the coalition, working with an organization like the EFF and even creating public relation campaigns to appeal to the support of the world populace. In the rare instances when a government attempts to work with the private sector to understand the concerns that it has — for instance, as the U.S. government is trying to do with the proposed “Digital Security Commission” — then the coalition would need to support such efforts as much as possible.

It is true that the coalition’s efforts in countries like China and Russia might be limited, and they will be also be limited when a country feels that a criminal act, like terrorism, is better dealt with by eroding encryption and cybersecurity measures. In an instance concerning China, insurers could consider increasing the amount of re-insurance that they purchase on their cyber liability and technology E&O portfolios to offset the damage from increased claims. Insurers will also need to be extremely cautious when providing cyber liability and technology E&O coverage to organizations that have close relationships with non-democratic governments (like the Chinese government) or ones that produce products that have a high likelihood of being the result of IP theft, such as any mid- to high-end binary processor.

The pursuit of the best encryption and cybersecurity measures needs to be unencumbered by the efforts of any government, just as alarm systems have been free to evolve over the past two or three millennia. This can only be achieved, though, through the unified actions and vigilance of a coalition. Encryption and resilient cybersecurity frameworks are the essential and irreplaceable elements in a safely connected world. To limit, in any way, the efforts to perfect those elements or to purposefully reduce their effectiveness is irresponsible regardless of whether the reason is national security or the pursuit of breaking a criminal enterprise. Lloyds, and other organizations involved with cyber liability and technology E&O insurance, see a future where insurers are able to achieve healthy profits off those two products. However, if insurers do not responsibly oppose governmental attacks on encryption and cybersecurity, that profitable future will give way to a future of excessive claims, damaging losses and very little profit.