How ready are companies to address climate risks? | Insurance business America
Munich Re’s report examines the situation and general preparedness for natural disasters
reinsurance
By Kenneth Araullo
Munich Re has published its Climate Risk Preparedness Survey 2023/24, underlining the great concern about climate change and its impact on weather-related disasters.
The global survey shows that companies, the public and authorities are prepared and perceived differently for climate risks.
The year 2023 was the hottest year on record as extreme temperatures led to severe weather events. In both the United States and Europe, damage from thunderstorms reached unprecedented levels. Against this background, Munich Re wanted to assess whether various industries feel prepared for these escalating climate risks.
The survey shows high levels of concern about climate change, although there is a clear gap between concern and willingness to invest in prevention measures. Respondents affected by past weather disasters expressed increased concern and a greater willingness to invest in loss prevention.
Munich Re notes that these results highlight areas where additional investment in preventative measures and the integration of insurance mechanisms into comprehensive risk management strategies may be required.
How well prepared are companies to deal with climate risks?
A clear majority (80%) of respondents expressed concern or great concern about the impacts of climate change. Conversely, about 20% said they either weren’t particularly worried or hadn’t thought about it.
Regional differences are notable. Concern about climate risks is greater in emerging countries such as South Africa, Brazil and India than in developed countries such as Japan, Germany and China. This discrepancy could be due to the greater preparedness and financial resilience of stronger economies.
European countries, which are generally less affected by extreme natural disasters, show lower levels of concern. However, 2023 saw record damage from severe thunderstorms, often accompanied by tornadoes and hail, in both the United States and Europe.
In Japan, strict building codes and a focus on earthquake risks may help reduce concerns about climate change, despite the country’s vulnerability to natural disasters. Japanese respondents tend to prioritize earthquake prevention and risk awareness over weather-related disasters.
Respondents’ concerns about the negative impact of climate change on their companies reflected their general concerns. Senior managers (C-level) showed greater concern compared to lower-level employees.
Additionally, concern about the impact of climate change on businesses has increased over the past decade, particularly among executives and respondents in emerging markets.
The survey results indicate that pure property damage is not the primary concern for any group or region. Rather, business interruptions and loss of sales are viewed as the most serious risks. For top managers, supply chain disruptions also represent a significant risk, leading to lost sales and business disruptions.
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2024-06-14 14:00:00
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