Climate change ranks as the biggest business risk, says Ernst & Young.

According to Ernst & Young's Strategic Business Risk Insurance 2008, the changing weather patterns brought on by climate change will increase the likelihood of losses storms and floods and will also affect insurance company pricing and reserving policies, not to mention solvency and corporate viability. It can also contribute to health problems as well as the spread of environmentally related litigation. Climate change also produces the political risk of conflicts over scarce resources, and might have an impact on capital markets.

Other risks identified in the document are shifting demographics where the population over the age of 60 will increase from 20 per cent in 2005 to 33 per cent in 2050; the increased likelihood of catastrophic events like floods, hurricanes, earthquakes, terrorist attacks and pandemics; challenges in emerging markets like China; increased regulatory intervention; the increased trend towards multi-channel distribution pipelines; the growing integration of technology with operations and strategy increasing the risk of over-dependence on outsourcing partners and cyber-terrorism; the growing complexity of financial innovations such as securitizations and derivatives; legal risk, particularly with environmental liability, managerial liability where aggrieved shareholders might hold corporate directors personally liable for company failings and liabilities that come from entering new markets; geopolitical or macroeconomic shocks that might include anything from a financial meltdown emerging from derivatives and hedge funds, a setback in Chinese growth, global imbalances and terrorism. It's also worth noting that systemic risks from financial innovation are increasing all the time.