Facing up to the defining global risk of our age

The World Economic Forum’s 2020 Global Risks Report makes clear that the interconnected risks of climate change are on the minds of business leaders as never before.

Like so many citizens around the world, business leaders are becoming increasingly worried about trends they see accelerating in the global environment. From severe storms and unprecedented flooding events to catastrophic wildfires like those that have ravaged California and Canada, and now raging across Australia, change is in the wind, and not to the good.

With the launch of the World Economic Forum (WEF) 15th annual Global Risks Report it’s clear that a growing number of leaders now view climate risks as the defining challenge of our age, not only for the resilience of their organizations but also for the security of their countries and the sustainability of global society.

The 2020 Global Risks Report, for which Zurich is a strategic partner and content contributor, is a cautionary tale and a powerful call to action for governments, corporations and the wider world community to face up to the challenges of climate change while there is time to make a difference. The overriding message of the report is that without a coordinated, global commitment we face the virtual certainty of worsening geopolitical, macroeconomic and societal impacts due to a climate in crisis.

The more than 800 Forum members responding to the 2020 Global Risks Perception Survey – the foundation of the annual Global Risks Report – ranked climate-related concerns as the top five risks in terms of likelihood. The report further notes that despite the need for more ambitious steps to combat threats posed by runaway climate change, the United Nations warns that countries have veered off course regarding their commitments under the Paris Climate Agreement. Among the most serious of the interconnected impacts is a rapidly accelerating loss of species due to habitat degradation, threatening devastating consequences for global biodiversity.

Complicating the near-term global risks landscape is an unsettled geopolitical environment testing long-standing alliances and established global institutions. The report notes that economic, demographic and technological forces are shaping a new balance of power. And while shifting relationships may create positive openings for new partnerships, these uncertain times are straining shared responsibilities and disrupting relationships central to addressing major, global risks. Climate is potentially the most consequential.

While the concerns cataloged in the 2020 Global Risks Report are troubling, it states that the window for positive change is still open. Whatever divisions have strained relations among national governments, the global business community is signaling a growing commitment to look beyond their balance sheets to the urgent challenges on the horizon. However, that window of opportunity is narrowing, requiring coordinated, multi-stakeholder action today to help mitigate the worst impacts of climate change in the future and to build local and global resiliency against the inevitable impacts of the changes already occurring.

At Zurich, we share the belief that businesses must collaborate with governments, nongovernmental organizations and each other to build a strong, coordinated platform for change. One such collaboration we’ve undertaken has resulted in a new report, “California fires: Building resilience from the ashes.” The report used Zurich’s award-winning Post-Event Review Capability to study the historic wildfires in California in 2018 and 2017, identifying practical steps to help boost communities’ sustainability in wildfire-prone areas around the world, including in Australia. The report was made possible through a collaboration among Zurich, the nonprofit Institute for Social and Environmental Transition (ISET-International) and DuPont. We see an expanding list of organizations taking affirmative steps to reduce their carbon footprints, presenting examples others can follow. We are proud that Zurich is among the voices leading the way. We recognize climate change and sustainability issues have direct impacts on corporate risks, reputations, financial performance and resilience. The experiences of a growing number of organizations have shown that commitments to sustainability make good economic sense. Even more, it is simply the right thing to do.

As a global insurance organization serving customers in more than 215 countries and territories, we have a clear sense of our role in society and our responsibilities to our customers, our employees and the wider global community. We have an obligation to work with customers as well as public and private partners to enhance resilience and to advocate for solutions to mitigate the negative consequences of weather and climate-related perils.

We will lead the way in developing insurance and risk management solutions supporting the new technologies, business models and approaches required to achieve a successful transition to a low-carbon economy. We are dedicated to continuing a leadership role in raising awareness of the critical need to focus on global sustainability.

It is telling indeed that the 2020 Global Risks Report flagged climate-related issues as the top five risks likely to have the greatest long-term impacts on our collective future. The road before us is becoming increasingly clear. Zurich invites and encourages organizations, governments and individuals to work together to understand and takes steps to mitigate the challenges ahead.

For a global view of Zurich’s sustainability initiatives and activities, please visit: www.zurich.com/sustainability.

By: Kathleen Savio
CEO, Zurich North America