Every week, it seems, a new report comes out furnishing new evidence of the potentially devastating impact of climate change. As a re/insurer, Swiss Re is squarely in the middle of the debate and striving to be on the right side of the argument. But talk only takes you so far; it’s action that wins the day.
Last week I participated in a panel with financial services leaders and academics at the Economic Club of Toronto, where everyone agreed the stakes are getting higher and we must take bolder steps. The program theme was more than a catchy turn of phrase. It has profound meaning: “If you don’t get climate change, climate change will get you.”
Left unchecked, climate change will lead to increased nat cat losses, which impact every aspect of society and every corner the world. For example, consider that a hurricane in the Gulf of Mexico can have paralyzing effects not only in the region but throughout the world due to business interruption and supply chain disruption.
Much is expected of companies like Swiss Re, because climate change is core to our business of taking on risk. We focus on mitigation (taking the risk out of the system) and adaptation (increasing physical, financial and emotional resiliency) in the following ways:
- We help assess risk, put a science- informed price on it, and facilitate risk transfer so insurers and business enterprises can increase resilience to the shock of severe weather with minimal interruption and revenue loss.
- We help finance and protect critical infrastructure and have started to collaborate on smart cities projects, which hold the promise of a lower carbon impact and more resource efficient way of urban living
- We insure natural assets, such as coral reefs and wetlands, which protect economic interests, whilst providing very effective water damage impact reduction and retaining biodiversity in our environment
- We support national flood schemes, such as the National Flood Insurance Program (NFIP) in the United States or Flood Re in the UK, so that even the most exposed families in the country can still benefit from some form of protection, whilst their governments work on long term adaptation plans that improves access to commercial insurance solutions
- We also adhere to strict standards in managing our own investment portfolio, avoiding companies with more than 30% of revenue of power generation stemming from thermal coal.
- We support, through insurance and investment, renewable energy projects which reduce our carbon footprint, one of the main causes of climate change.
Last year, natural and man-made disasters caused USD 144 billion in insured losses globally, making it the most destructive year on record. It was also the most devastating year for wildfires, with USD 14 billion in insured losses. And while Canada didn’t sustain losses like the 2016 Fort McMurray fires it was the worst wildfire season in BC history, prompting provincial officials to call for stronger measures to address climate risk.
I’m encouraged by this brand of critical thinking. To me it signals urgency, commitment and a willingness to invest in a better future. It will take a “whole of society” approach to meet the challenge of climate change – with participation from governments, the private sector, academia, NGOs and others. But together we can do it.
The continued sustainability of our society and economy depends on awareness of climate risk and disclosure of its potential impact on our operations (and financials), followed by action informed by this understanding.
 sigma, Natural catastrophes and man-made disasters in 2017: a year of record-breaking losses, No 1/2018, Swiss Re
Category: Climate/natural disasters: Climate change, Resilience