Increasing weather-related natural disasters not only cause property damage but also pose serious risks to supply chains, leading to business interruptions and potential economic slowdown, according to Swiss Re’s 2024 SONAR report.
Swiss Re highlights that wildfires can contaminate water sources or disrupt access to them. Similarly, floods and storms can damage energy grids and transportation networks, halting production lines due to power outages. This results in lost production time, spoiled materials, and delivery delays. When critical infrastructure and supply chains are affected, the damage can be extensive.
The report notes, “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.”
Swiss Re emphasises, “Given the current situation and the negative outlook on these risk drivers, supply chain resilience should be at the top of companies’ agendas. If risks accumulate or coincide with an already stressed supply chain, the economic fallout could be significant.”
Climate change and supply chain issues also affect healthcare infrastructure, worsened by consistent underfunding. Essential services like water, sanitation, and electricity may be compromised under extreme climate scenarios, leading to higher risks of frequent flooding and other disruptions.
Weakened health services increase societal risks, with delayed or inadequate care contributing to higher morbidity and mortality rates. This also affects economies through increased health-related absenteeism and understaffing. This underfunding and its impacts are concerns across low-, middle-, and high-income countries.
Patrick Raaflaub, Swiss Re Group Chief Risk Officer, comments, “We live in a world characterised by interconnected crises, which in turn can give rise to new risks. 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.”
