According to the latest edition of WTW’s Natural Catastrophe Review, the numerous unanticipated disasters recorded in 2023 have highlighted the need for a “proactive approach” to risk identification, mitigation and adaptation.
“In a world increasingly shaped by ageing infrastructure, climate change and urban growth into risk-prone areas, we are now facing disasters that were either not anticipated or deemed unlikely just a few decades ago,” WTW explained.
The firm noted that this evolving situation “necessitates a pivot” toward not just recognising, but actively preparing for a wider array of risks, some of which might have been previously dismissed or underplayed.
Outlining a way in which risk managers can do this, WTW underscored the importance of examining how historical events could have resulted in worse outcomes, also known as downward counterfactual analysis.
“For example, in 2018, Hawaii experienced wildfires very similar to those in 2023 affecting West Maui. Although the 2018 fires were less severe, exploring how they might have escalated could have better-prepared risk managers for the significantly more destructive wildfires in 2023,” the firm observed.
Daniel Bannister, Weather & Climate Risks Research Lead at WTW, added, “2023’s wildfires showcased nature’s power and human influences, emphasising the need for combined local and global strategies in effective wildfire management.”
Similarly, WTW referenced a 2022 research paper on historical flooding in Libya which warned that a recurrence of a major event, such as the devastating 1959 floods, could result in dam failures in Derna.
“Despite this prediction, the warnings went unheeded, and the anticipated risk materialised following storm Daniel in 2023,” WTW said.
The broker concluded, “The importance of such foresight cannot be overstated, especially given that the historical record alone does not capture the full range of potential risks from rare natural hazards.
“By examining what-if scenarios, organisations and governments can gain insights into potential vulnerabilities and develop strategies for a more resilient future.”
