As climate change and the associated increase in natural catastrophe events alters the contemporary risk landscape, there is now an opportunity for companies to partner with the (re)insurance market and put its expertise to work.
With the global economy facing its deepest economic contraction since the second world war, many governments are looking to infrastructure development to reinvigorate growth. Investments in infrastructure have the potential to boost productivity, facilitate trade and generate widespread multiplier effects that can aid economic recovery, according to Blair Chalmers, Director of Marsh & McLennan Insights and Lawrence Slade, CEO of the Global Infrastructure Investor Association. As public sector support for infrastructure development and adaptation grows, new opportunities are likely to emerge for private infrastructure owners and operators — both in the construction of new infrastructure, as well as in the enhancement of existing assets.
However, the risk profile of infrastructure assets is shifting: Climate change is imposing new pressures on the long-term and stable returns traditionally promised by the infrastructure sector. Volatility in the earth’s climate and an unprecedented global transition toward low-carbon energy and consumption is presenting new risks and the private sector will not be able to effectively protect against these risks alone.
Instead, to truly build resilience against the risks presented by the climate challenge, private owners and operators of infrastructure will need to employ a stakeholder engagement-focused approach. As the complexity of the climate challenge intensifies, proactive engagement across a diverse range of stakeholders relevant to an asset will become crucial for both identifying climate risks and for building resilience against them. This will include both communication and collaboration with the public sector, industry peers, local communities and shareholders.
Guy Carpenter is well-placed to advise clients on responding to climate change risk. We have multiple experts in atmospheric and climate science across the globe that have been actively researching and consolidating the scientific literature. Our solutions can help clients make informed decisions about pricing, capital and risk management strategies.