Advances in technology are expected to have the greatest impact on investment institutions over the next ten years, creating major opportunities and threats.
A new report from Willis Towers Watson (WLTW) argues that automation, artificial intelligence, FinTech, biotechnology and personalised medicine all have the power to transform society and fuel economic growth.
However, it also highlights how cyber security and privacy risks present major threats to investors, with demographic changes and environmental challenges also identified as key 'megatrends' over the next decade.
"It is increasingly apparent that these megatrends, and the ability to understand and manage them, should form part of all institutions' investment processes," WLTW global head of asset research, David Hoile, said.
"A deeper insight into the risks and challenges facing them is crucial to building resilience and creating opportunities."
To identify the key trends impacting the global economy, financial system and the UN's Sustainable Development Goals, WLTW surveyed 300 companies, including major global asset owners, investment managers and service providers
Globalisation and emerging economy growth join technological advances, demographic changes and environmental challenges in the top five megatrends identified by the respondents.
This is summarised below:
These megatrends are defined as global, macro forces that will transform business, the marketplaces they operate in, and society.
The study also shows that social inequality and global capital flow issues, including public sector deficits, could emerge as rival concerns for senior global investment industry figures.
"The widening economic inequality gap is one of the most pressing challenges we face today," said Fiona Reynolds, managing director at the Principles for Responsible Investment, which contributed to the research.
"It's also not surprising to see environmental concerns featuring so highly in the list, as they have figured in the top concerns of the World Economic Forum’s Global Risks Report."
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