Research from the British Standards Institute (BSI) has found that global supply chains gained a combined $56bn in extra costs last year, incurred by crime, extreme weather, terrorist threats and the migrant crisis that swept across Europe.
From a purely business standpoint, considerations of where and how to build facilities (or alter existing ones) to lessen climate risk have moved up the risk management priority list. Such moves can ward off costly business stoppages in the event of extreme weather events. Perhaps more significant, on an ongoing basis, they also earn lower property insurance premiums.
Most of us take the weather report with a grain of salt. How many times has the meteorologist on the evening news told us that rain is coming later in the week, yet we find ourselves soaked to the skin by the time we get home from work the next day?
Analyst Insight: Companies are starting to look at climate change more scientifically. Rather than making judgments based on their own experience, they are using external data to drive models to gauge the potential for disruption to their own supply chains - from singular events such as hurricanes to longer-term effects such as crop migration. This process helps them to understand how truly resilient they are in their ability to source, manufacture and distribute their products. - Glen Goldbach, Principal, PwC; Christoph Hahn, Director, PwC; Kelvin Harris, Director, PwC
Claims related to the massive explosion at the port of Tianjin, China, may grow to as much as $6bn, says the International Union of Marine Insurance (IUMI). More than half of the claims reportedly fall within marine insurance or reinsurance lines - potentially making it the largest single marine disaster (by claim value) in history, surpassing Hurricane Sandy.
Goldman Sachs Group Inc., Coca-Cola Co. and 73 other companies that together buy more than $2tr of goods and services are unprepared for climate shocks because suppliers are ignoring requests for data on their exposure to rising temperatures and climate regulation.
For some people, even to discuss the impact on an economy, let alone financial markets, of a tragedy such as the Paris attacks is poor taste. But one of the aims of terrorists is to cause economic and financial damage; hence the attacks on Wall Street on 9/11 or on tourists in Tunisia earlier this year. So the issue is worth considering.
Speaking at this year's International Union of Marine Insurance conference in Berlin, Simon Williams, chairman of IUMI's offshore energy committee, reported continuous growth in the sector with 2015 capacity reaching around $7bn, although he cautioned that $5.5bn was more realistic.