A sustainable future is our collective choice
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When Swiss Re identified climate change as an emerging risk 30 years ago, the topic was lauded for its environmental importance, but back then it still wasn't perceived as a material business issue. Today, that perception has considerably changed. Steadily increasing average global temperatures are a well-monitored fact. Ice caps are melting, sea levels are rising, and with warmer air holding more moisture, heavy precipitation periods in many regions of the world have become a regular occurrence – consider the floods of recent months in India, Pakistan or the US. Wildfires also more regularly hit populated areas in a rapidly growing wildland-urban interface. It was devastating to see the impact of the Californian wildfires late last year, which claimed lives and destroyed whole communities.
Today, more people live on coastlines, in former flood plains, or in dense urban areas than ever before – a settlement pattern which increases communities' vulnerability to severe weather. Heatwaves and changes in infectious disease transmission patterns are a likely major consequence of climate change. Often the poor and the elderly are affected first – and with the demographic changes of aging societies across the globe, the negative impact of climate change on humans may be even stronger in the future.
In the absence of adaptation, in the long term global warming may force insurers to increase prices. For individuals or communities in highly exposed locations, this could mean that insurance might not remain affordable. We can't allow this to happen, so what we need to do is both understand the physical risk, and encourage adapting measures.
As a risk knowledge company, we devote significant resources to developing solutions to tackle the growing risks associated with climate change and to narrow the gap in insurance protection. Our claims data collected over several decades and our natural catastrophe models facilitate risk assessment. We bundle this research in the Swiss Re Institute to inform our underwriting, investment and operations actions and use the insights to raise risk awareness. Ultimately, we're striving to prepare and protect businesses and communities, thereby strengthening their resilience. As we've outlined in our 2018 Financial Report, we're also committed to playing an active role in the transition towards a low-carbon economy by ensuring both our underwriting and investment activities are sustainable.
It will take a "whole of society" approach to limit global warming before it's too late. Collaboration across sectors, as well as urgent, large-scale changes from governments, companies and individuals, is crucial. After all, nurturing solid economies and building societal resilience is a matter of global interest – and a sustainable future is our collective choice.
This article was originally published in the Swiss Re Institute May 2019 newsletter- subscribe to the newsletter.