Business leaders waking up to extreme risks posed by climate change

The World Economic Forum Global Risks Report 2019 shines a light on a topic that Zurich has been calling attention to for a long time.

The report’s Global Risks Perception Survey identified “extreme weather” as the top risk in terms of likelihood over a 10-year horizon and placed it at No. 3 in terms of impact over the next 10 years.

{mosads}While there are a multitude of problems facing the world today — and 30 distinct global risks that survey respondents were asked to consider — it is not surprising that extreme weather has risen to the top and remained there for the third consecutive year. 

What would be surprising at this time is if the collective global community did not respond with a sense of extreme urgency to address this persistent yet evolving risk.

If recent history is any indication, extreme weather events will continue to devastate communities around the globe. The United States, in particular, has experienced several weather-related disasters during the past two years.

In 2017, Houston, Florida and Puerto Rico were pummeled by three of the most damaging hurricanes in history —Harvey, Irma and Maria, respectively. A study by Aon Benfield determined that 2017 was the costliest year on record solely for weather-related economic losses, which totaled more than $344 billion.

In 2018, two more massive hurricanes made landfall in the Southeast — Hurricane Florence brought catastrophic flooding to the Carolinas, and Hurricane Michael became the most powerful storm ever to hit the Florida Panhandle.

Scientists say that climate change and the steady warming of the planet will add to our extreme weather risk, leading to more intense hurricanes with greater rainfall amounts, rising sea levels and more coastal flooding and extreme droughts. The camp fire in Northern California last year was the state’s deadliest and most destructive wildfire on record. 

Respondents to the WEF survey seem to recognize the connection between the increase in severe weather events and climate change. “Failure of climate change adaptation” was identified as the No. 2 risk both in terms of likelihood and impact in this year’s Global Risks Report. 

For our part, Zurich produced a report in 2018, “Managing the impacts of climate change: risk management responses,” that provides risk management tools and outlines approaches and best practices to help businesses respond to the growing threat of climate change. 

On a broader scale, Zurich is working to help businesses and communities build resilience against severe weather by emphasizing the benefits of relevant insurance solutions combined with investments in proactive resilience strategies. Based on industry analysis of past events, we know that every $1 invested in prevention saves $5 on future losses. 

Part of Zurich’s own investment is our Global Flood Resilience Program, which focuses on a hazard that affects more than 250 million people worldwide each year and is responsible for some of the largest economic and humanitarian losses.

We have invested $55 million to help fund research and field work that has improved the lives of thousands of families and businesses. 

Gaining valuable insights from past events is another important part of Zurich’s commitment to developing resilience strategies. On a global basis, we have studied 13 flood disasters using our Post Event Review Capability (PERC) since 2013.

The insights developed from these reviews have helped us identify what has worked well in flood mitigation and where there is room for improvement.

We applaud the efforts of communities that seek to mitigate future losses from natural disasters, like Harris County, Texas, where voters last year approved a $2.5 billion bond proposal to fund flood-mitigation projects. 

At the federal level, we support the inclusion of much stronger resilience features in proposed reauthorization of the National Flood Insurance Program. And we support the United Nations Office for Disaster Risk Reduction “Build Back Better” initiative in the implementation of better building codes during recovery, rehabilitation and reconstruction wherever natural disasters occur. 

Severe weather events are inevitable, but disasters are not. This year’s Global Risks Report seeks to illuminate risks that threaten individuals, businesses and governments throughout the world. Working together, we can ensure that a light continues to shine on these risks and, hopefully, find solutions.

Kathleen Savio is CEO for Zurich North America, a leading property and casualty insurance provider. Zurich is a strategic partner with the World Economic Forum.