RISK ASSESSMENT: THE MAIN RISK FACTORS DERIVING FROM NATURAL CATASTROPHES IN THE GLOBAL CONTEXT

It has been outlined during the 6th EELF annual conference that, according to the World Economic Forum's global risk perception, environmental risks are growing in prominence year by year and are commonly classified into several different categories.

In relation to this topic, climate change – i.e. an increased volatility of extreme weather events in many parts of the world – is a reality that a growing number of people have to face at a global level. This is shown by the available data, which indicate that total economic losses from disasters across the world were an estimated USD 165 billion in 2018, with around USD 155 billion resulting from natural catastrophes and the remainder from man-made events, and that almost 13,500 people died or were missing.

Among the most significant environmental challenges are: extreme weather events (e.g. hurricanes, extreme rainfall, storms and other weather- related hazards – especially in connection with their consequences in terms of displacement); rising temperatures and more frequent heatwaves, which may have consequences in terms of disruption of agricultural systems (causing famine and hardship, by reason of interconnectedness); accelerating biodiversity loss; pollution of air, soil and water; and failures of climate-change mitigation and adaptation, as well as transition risks, as we move to a low-carbon future.

Moreover, under a traditional categorisation adopted for insurability purposes, extreme natural events have been related to their catastrophic consequences and included by insurers and reinsurers within the definition of “natural catastrophes”, in contrast to the other kind of events that we would call “man-made disasters”. Regarding the former, the term “natural catastrophe” refers to an event caused by natural forces, generally resulting in a large number of individual losses, depending both on natural forces and on man-made factors, and also being the subject of many insurance policies. As to the latter, the category of man-made or technical disasters usually encompasses explosions, aviation and space disasters, shipping disasters, rail disasters, mining accidents, the collapse of buildings/bridges, and other similar events (including terrorism).

It has to be observed that the consequences of climate change, natural catastrophes and man-made disasters are nowadays considered a priority both by the insurance sector, from a private angle, but also by governments, from a public angle.