As the world changes at an ever-increasing pace, one of the challenges for insurance companies is to identify emerging risks.

Not only so they can meet the ever-evolving needs of their clients, but also to help them recognise the "next asbestos" before it causes them crippling losses.

Last week, XL Group held a seminar entitled "Emerging Issues" that was attended by some 30 insurance brokers at the home of the company's Bermuda operations, XL House.

Leading the discussion was Ulrich Weilenmann, global manager of XL Casualty Risk Engineering.

Some of the risks he and his fellow engineers have monitored at XL could impact many of us in our everyday lives, as well as the big businesses that XL insures.

One such major emerging risk is low-cost country sourcing.

"Everyone is outsourcing to China," Dr. Weilenmann said in an interview. "What we are seeing is that the product quality is often not up to the standards of the West. This is leading to significant losses in the industry."

The well-publicised problems with Chinese drywall — and the problems it has reportedly caused in homes related to the emission of sulphur gases that corrode copper coils and electrical and plumbing components — is one good example of this risk.

Dr. Weilenmann said it was not only product quality that posed risks.

"Some of these products must travel for weeks on a boat to the country that is importing them and so they are treated with pesticides," he said. This had led to problems such as people suffering burns when sitting on imported furniture, for example, which in turn exposed the companies selling them to expensive litigation.

Dr. Weilenmann's team of 12 risk engineers monitors this emerging risk by delving into the roots of the problems. For example, they have established that 90 percent of low cost sourcing problems relate to goods imported from China. They will then delve deeper to look into the reasons why that is so.

Dr. Weilenmann gave the example of another emerging risk that has caused widespread concern — that of the potential effects on human health of Bisphenol A, a product used in the manufacture of clear plastics.

The product has been used to make baby bottles, among many other commonly used items. Some studies have suggested that Bisphenol, which has been linked with cancer, can leach from the baby bottle into the milk, Dr. Weilenmann said.

Cell phones have become increasingly prevalent in modern society, but some have expressed concern about the electromagnetic radiation caused by phones and their possible impact on the brain. Dr. Weilenmann said: "I've not seen any evidence of problems with these low-level electromagnetic fields in the workplace. But it is possible that they could damage some very sensitive people in the population."

Another future risk that is worrying some insurers is nanotechnology, the manipulation of materials on a molecular level, which is already widely used for example in the aerospace industry and in the frames of tennis racquets.

Nanotechnology could have wide-ranging uses, from medicine to electronics and energy production.

"There is particular concern about nanotubes," Dr. Weilenmann said. "It is possible that they could act like asbestos when they get into the human body. They are a similar shape to asbestos fibres."

XL has an Emerging Risk Task Force, made up of engineers, underwriters and claims managers. It monitors new or growing risks and it ties into the company's Enterprise Risk Management programme.

The work of the engineers and the Task Force can help XL to adapt policies to meet the evolving needs of clients.