Swiss Re on the impact of natural disasters and other emerging risks

Swiss Re on the impact of natural disasters and other emerging risks | Insurance Business Canada

Reinsurance

Swiss Re on the impact of natural disasters and other emerging risks

Newest insights explore compounding effects of nat cat events

Reinsurance

By
Kenneth Araullo

Swiss Re’s 12th SONAR emerging risk report reveals that the world is facing a series of interconnected crises, leading to increasingly complex risks.

Patrick Raaflaub (pictured above), Swiss Re Group’s chief risk officer, emphasized the importance of anticipating trends and understanding the impact of major global issues.

“For re/insurers, it is key to anticipate trends and understand how major global issues such as climate change, economic uncertainty or geopolitical turmoil could impact not only the industry but also society as a whole,” Raaflaub said.

The report notes that weather-related natural catastrophes, including floods, wildfires, and storms, are becoming more frequent and severe. While these events can cause property damage and loss of life, their cascading effects pose additional risks.

Wildfires can contaminate water sources or disrupt water access, while floods and storms can damage energy grids and disrupt transportation networks. These disruptions can halt production lines, spoil materials, and delay deliveries, with significant accumulation of damage if critical infrastructure and supply chains are affected.

In the wake of large-scale disruptions caused by the COVID-19 pandemic, companies initially prioritized supply chain security. However, the focus has shifted back to immediate cost savings, even as risks to supply chains have grown.

The report highlights the Red Sea crisis as an example of how a volatile geopolitical landscape, increasing extreme weather events, economic uncertainty, and heightened cyber and technology risks are making key supply routes less secure. Swiss Re suggests that supply chain resilience should be a top priority for companies, as the accumulation of risks could lead to significant economic fallout.

The report also addresses how climate change and supply chain issues are impacting healthcare infrastructure, compounded by consistent underfunding. More extreme climate scenarios, resulting in frequent flooding and other disruptive events, may compromise essential services such as water, sanitation, and electricity.

Weakened health services increase societal risks, with delayed or inadequate care leading to higher morbidity and mortality, and impacting economies through increased health-related absenteeism and understaffing. The concern of underfunded healthcare systems is prevalent across low-, middle-, and high-income countries.

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