Natural Disasters Threat To Global Supply Chains, Economic Stability – Swiss Re

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Swiss Re, a leading risk underwriting player in the global reinsurance market, has reported that increasing weather-related natural disasters not only cause property damage but also pose serious risks to supply chains, leading to business interruptions and potential economic slowdown.

The firm, in its latest 2024 SONAR report, projected that wildfires can contaminate water sources or disrupt access to them while floods and storms can damage energy grids and transportation networks, halting production lines due to power outages.

A news report from Reinsurance News, an online medium, on the report’s findings quoted Swiss Re as noting that this results in lost production time, spoiled materials, and delivery delays. When critical infrastructure and supply chains are affected, the damage can be extensive.

The report stated: “Due to the more volatile geopolitical landscape, increasing frequencies of extreme weather events, economic uncertainty, and heightened cyber and technology risks, key supply routes around the globe are likely to become less secure.

“Given the current situation and the negative outlook on these risk drivers, supply chain resilience should be at the top of companies’ agendas. If risks accumulate or coincide with an already stressed supply chain, the economic fallout could be significant”, Swiss Re added.

The reinsurance firm further reported that climate change and supply chain issues also affected healthcare infrastructure, worsened by consistent underfunding, warning that essential services like water, sanitation, and electricity may be compromised under extreme climate scenarios, leading to higher risks of frequent flooding and other disruptions.

In addition, the report indicated that weakened health services increase societal risks, with delayed or inadequate care was contributing to higher morbidity and mortality rates and that this also affects economies through increased health-related absenteeism and understaffing.

Swiss Re maintained that this underfunding and its impacts remained major concerns across low-income, middle-income, and high-income countries.

Commenting on the report’s findings, Swiss Re Group Chief Risk Officer, Patrick Raaflaub, said: “We live in a world characterised by interconnected crises, which in turn can give rise to new risks. For re/insurers, it is key to anticipate trends and understand how major global issues such as climate change, economic uncertainty or geopolitical turmoil could impact not only the industry but also society as a whole.”


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