Natural perils: impact on supply chain & innovative parametric risk solutions
Part 1 – The impact of climate change on supply chains – Using drones to strengthen resilience against flood risks (20 minutes – by Philip Brandl)
The effects of climate change are visible every day and everywhere. Studies show that by 2100, the total costs of climate change will amount to 20 percent of the global GDP. As natural catastrophes become more frequent and difficult to predict, questions concerning the economics of climate adaptation become an important consideration for senior leaders.
Loss experience shows that flood is an underestimated peril. Many locations affected by a severe flood lie outside marked (modelled) flood zones. Scrutiny in portfolio analysis and challenging status-quo become more important than ever to understand flood risks. In a world of highly integrated, globally connected supply chains, businesses can be impacted by floods directly or indirectly if a critical supplier is affected.
Flood protection measures for an identified location rely on elevation data that is much more accurate than currently available. We will familiarize session participants with the latest in emerging technologies, such as drones, that are helping to improve the protection of facilities against flood losses. Current approaches use satellites and generate data in two dimensions. Come and find out how we at Swiss Re Corporate Solutions use drones for state-of-the-art flood risk assessments. We create rich elevation data, allowing us to visualize a facility using a 3D game engine and simulating rising flood levels. This flood risk assessment can be done not only for company-owned areas, but also for supplier locations, offering a highly accurate method to assess flood risk and develop an appropriate flood protection strategy.
Part 2 – Parametric and innovative risk solutions for new dimensions of natural perils (20 minutes – by Thomas Keist)
Economic losses caused by droughts, floods, storms or earthquakes are increasing each year and often affect entire industries. It is at the heart of our business to insure companies impacted by the effects of these and other natural perils. With custom-made parametric risk solutions, we find innovative and ground-breaking ways to address these risks around the globe that fall outside of traditional insurance. Parametric insurance provides immediate protection against financial losses or lost revenue. In addition, simple trigger and payout mechanisms speed up the claims payment process after parametrically measurable events.
As a stellar example of how companies can cope with new dimensions of natural perils, the session will showcase the parametric water-level insurance FLOW. Developed for businesses suffering from the record-breaking drought in Europe in 2018, FLOW protects companies whose revenues and costs are exposed to lows or highs of rivers. The index-based solution is customized to individual water-level exposures of companies, helping them to recover quicker after a loss of revenue due to business interruption or increased cost of operation.