Swiss Re explores cascading effects of natural disasters and other key emerging risks

Swiss Re's 12th SONAR emerging risk report explores 16 critical topics of the future to foster better understanding of new or changing risks, their interactions and dependencies. Key risks include the cascading effects of natural disasters, the weakening resilience of supply chains and the repercussions of persistent underfunding of healthcare systems. 

 

Patrick Raaflaub, Swiss Re Group Chief Risk Officer, said: "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." 

 

The report states that weather-related natural catastrophes are increasing in frequency and severity. While floods, wildfires and storms can lead to property damage and loss of life, the cascading effects of such events pose additional risks. Wildfires can impact the water infrastructure by contaminating water sources or cutting access to it. Floods and storms can likewise damage energy grids and disrupt transport networks, bringing production lines to a standstill, leading to lost production time, materials spoilage and delays to deliveries. If critical infrastructure and supply chains are affected, the accumulation of damage can be significant. 

 

While the security of supply chains was a priority for companies following the large-scale disruptions caused by the COVID-19 pandemic, the focus has shifted back to immediate cost savings. The cost pressure has grown, but so too have the risks to supply chains. Due to the more volatile geopolitical landscape, increasing frequencies of extreme weather events, economic uncertainty, and heightened cyber and technology risks, key supply routes around the globe are likely to become less secure. Given the current situation and the negative outlook on these risk drivers, supply chain resilience should be at the top of companies' agendas to prevent significant economic fallout. 

 

Climate change and supply chain issues also affect the healthcare infrastructure, exacerbated by consistent underfunding of healthcare systems. Essential services such as water, sanitation and electricity supplies may be compromised under more extreme climate scenarios that cause a higher risk of frequent flooding and other disruptive events. Weakened health services increase risks for societies, with delayed or inadequate care contributing to higher morbidity and mortality, and thus also impact economies through increased health-related absenteeism and understaffing.  

 

Find out more here.