Building Flood Resilience in a Changing Climate – new reports from Geneva Association now available

Building Flood Resilience in a Changing Climate – new reports from Geneva Association now available

By Robin Hamaker-Taylor

Over the course of 2020, leading international think tank of the insurance industry, The Geneva Association, released a set of country-based reviews of flood risk management. Covering five countries, reports are available for the United States, Germany, England, Australia and Canada.

“Floods are the costliest weather-related event globally, and climate change is likely to increase their frequency and severity. The impacts of weather-related events such as floods are a special threat alongside COVID-19, with government resources for emergency management and socio-economic recovery already stretched. We hope our findings effectively guide the public and private sectors in protecting society from this growing risk”, said Geneva Association Managing Director Jad Ariss.

Flooding is a persistent and expensive challenge to businesses and communities, and will continue to be so if preventative measures are not put in place, and ex-ante risk assessments are not made. At the time of writing, businesses, citizens, investors and insurers are set to see losses from flooding in the next few days in Australia, as heavy rainfall and storms in New South Wales have once again sparked evacuation warnings for many towns in the state. Meanwhile, the total out-of-pocket costs of flooding in Canada were recently estimated at almost CAD 600 million annually. (Swiss Re 2016 in Geneva Association, 2020).

A June 2020 summary report (covering findings from the US, Germany, and Australia) finds that stakeholders are in general reactive to floods. A more forward-looking, ‘all-of-society’ approach is needed. Governments, insurers, businesses and homeowners all have a role to play, and better public and private-sector cooperation is urgently needed to manage flood risk.

Practically speaking, governments, businesses, and individuals need to move toward a ‘risk-informed, anticipatory and system-wide approach to managing disaster risks, as suggested by Geneva Association Director of Climate Change , Maryam Golnaraghi.

These ex-ante efforts should certainly include investors and lenders, as flood risk can accumulate across portfolios, and compound with other risks, including shocks from a range of other hazards (e.g., biological hazards, driving pandemics, or geohazards driving earthquakes and tsunamis). Put simply, forward looking flood risk analysis is needed, under a range of plausible climate futures. Investors and lenders should screen for flood risk (in relevant sectors and geographies), and should aim to consider a systemic approach, where the combination of flood and other hazards are considered. This could be at the point of transactions, and in the management of portfolios and lending books.

The Geneva Association flood risk management reports aim to encourage better exchange between investors, businesses, insurers and businesses around flood risk. In particular, the reports look at the governance element of flood risk management in detail in the country, reviewing institutional frameworks and the interplay of different components of flood risk management. Investors and banks could use these guides to better understand the flood risk situation during security selection, or during engagement activities.

The main set of recommendations from the June 2020 summary report (of US, England, and Germany) are as follows (named stakeholders in bold):

  • Recommendation 1: Governments should develop a clear national strategy for FRM, with an anticipatory, cohesive and systems-based approach to building  flood resilience.
  • Recommendation 2: The insurance industry should further step up their proactive engagement with governments and their customers, as risk advisers, risk management experts, risk underwriters and investors, to support the implementation of FRM systems to strengthen resilience to floods.
  • Recommendation 3: Businesses and households should proactively seek flood-risk information; understand and take responsibility for managing their flood risk; and make risk-informed decisions.
  • Recommendation 4: International organisations, academic institutions, professional and executive education programmes could utilise this study in their awareness-raising campaigns and educational programmes targeted at government officials, policy makers, businesses and the general public, promoting the need for a risk-based, anticipatory, cohesive and systems-based approach, which takes climate change into consideration for building flood resilience.
  • Recommendation 5: Government officials, the insurance industry and other stakeholders responsible for FRM in these countries [U.S., England and Germany in particular, but also in Australia and Canada] should come together in their respective countries, review and discuss the gaps, challenges and weaknesses identified in our review and find effective ways to work together to enhance their FRM system towards a more cohesive, systems-based and forward-looking approach.

The reports are available here:

All reports and press releases stemming from this research programme can be found here.

Cover photo by johndal on Flickr.

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