According to the World Economic Forum’s ‘Global Risks Report 2019’, four out of the five threats rated “high” in terms of both likelihood and impact have a direct link to water risks: extreme weather events, natural disasters, failure of climate change mitigation and adaptation, and water crisis. The strong rise of water-related risks into the top five has happened in the last two years. Risk is defined by UNDRR as hazard x exposure x vulnerability. Natural hazards like floods, droughts, strong winds and extreme heat are at the core of water risks.
Due to climate change and urbanization an increase is expected of:
- Likelihood (probability) of events
- Frequency (rate of occurrence) of events
- Impact of events – higher damages due to increased number of people & increased value of assets
- Number and size of areas impacted by floods due to extreme weather.
This, combined with society being more sensitive to disruption, means that impact will be clustered primarily in cities and urban areas.
Major flooding can be catastrophic to society, not least because of economic impact
Floods affect more people globally than any other type of natural hazard and cause some of the largest economic, social and humanitarian losses. Loss of life and economic insured losses are increasing in many regions and flood risks are more interconnected and interdependent than ever. Prevention is cost-effective, but nearly 87% of disaster related spending on aid goes into emergency response, reconstruction and rehabilitation, and only 13% towards reducing and managing the risks before they become disasters (source: Zurich Flood Resilience Programme).
UNISDR data shows that 2 billion people were affected by floods and 1,5 billion people by drought between 1998 and 2017. In numbers of disasters per type, the top 3 consists of floods, storms and lightning. And, if you look at the breakdown of economic losses, storms cause the largest economic loss followed by floods and lightning. In 2018 alone, natural disaster events across the world led to economic damage of USD 225 billion (Aon weather climate and catastrophe insight 2018 annual report).
Although water and climate change risks are global challenges, their impact is determined by the local context. Impact of hazards and extreme weather can be seen at different scales: People, Property, Business, Economy, Society, Planet. These impacts include loss of lives; loss of living, environment and livelihood; societal disruption and economic damage.
Local fallout leads to global impact on supply chains, delivery and availability of goods
The financial damage can be huge if critical infrastructure is out of business or lost. For ports and airports, their operations are all about predictability and reliability of transport 24/7/365. Goods are primarily transported for supply chains or distribution channels of businesses and industries. With companies and consumers globally expecting 24/7 service and just-in-time delivery all year round, business continuity is fundamental.
Nowadays many goods are manufactured from products sourced from different countries. For cost reduction purposes, components may come from countries that often happen to be vulnerable to natural hazards. India and Bangladesh, for example, export a lot of ICT components. In 2018, the Airport Council International (ACI) recognised the potential impact of climate change on airport infrastructure and operations, and the need for airport resilience encouraging airports to conduct risk assessments, develop mitigation measures and communication channels, and take climate resilience and adaptation into consideration for their master plan.
Resilience should be a top priority in delivering long-term benefits to society
Extreme weather and natural disasters like floods can create major economic damage – costing governments and corporates billions, with a knock-on effect for society. With 24/7 service and global just-in-time delivery, business continuity is fundamental. Due to globalisation, local fallout will have global impact on supply chains, delivery and availability of goods. The impact on infrastructure and industries will also impact the financial sector. Banks, investors and insurers carry a portfolio risk for all infrastructure and businesses they insure or invest in.
Climate resilience is therefore essential to the people, society, economy and infrastructure. Fortunately, flood and weather-related risks and their impact can be reduced. Enhancing resilience should be the priority and combined effort of both governments and businesses. How to make that happen? More about that in Lisette’s next blog.