Water risks - Emerging risk initiative

The Chief Risk Officer Forum (CRO), a group of professional risk managers from the insurance industry including Allianz Global Corporate & Specialty experts, has launched a new report on water risks.

Water risks are often underestimated, disregarded or simply ignored. They represent major emerging risks for the re/insurance industry and for global society in terms of scarcity, pollution, health, treatment, conflicts, regulatory and reputational risks.

Water risks are complex to assess. Such difficulty stems from the paradoxical nature of water: it is plentiful to many yet its scarcity affects hundreds of millions of people, it is both fossil and renewable, it is freely supplied by nature but its treatment, distribution and wastage have a cost. This results in a global lack of preparation for future impacts and has implications for the re/insurance industry, as a majority of water risks represent externalities which are not properly priced or assessed.

Summarized in instructive and simple terms, illustrated with many practical examples, the paper is a contribution to the CRO Forum’s goal of providing best practice in risk management to advance business. In line with earlier papers by the ERI, this publication is a further demonstration that the re/insurance industry is concerned and strives to stay abreast of key social, climatic and technological evolutions.

For each water-related risk examined, it emphasizes how the insurance and reinsurance industry can offer assistance to customers that are adopting innovative water-related projects or technologies. The paper also shows that insurers and reinsurers can invest in promising projects to promote efficient water management or better assessment of the risks.

More information is available on the website of the CRO FORUM.

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