By shortening the lifespan of buildings and infrastructure, natural disasters and extreme weather events have a direct impact on their profitability for investors seeking a return on investment. In this context of increasing risks, how can we ensure that capital remains available to finance the projects that cities urgently need? Risk transfer, the secret weapon for insurers INSIGHT INSURANCE AS A DRIVING FORCE FOR RESILIENCE Investors – whether real estate, infrastructure or institutional funds – are now including climate resilience in their risk management. For them, reinforcing the physical protection of an asset also means protecting its long-term value. The most cost-efficient time to take action remains the construction phase: studies show that a dollar invested in resilience can generate between $4 and $16 in benefits. These gains translate into fewer casualties, less damage to property, less interruption to business and lower insurance costs. NEW ZEALAND: A LIFE-SIZE LABORATORY Between September 2010 and the end of 2011, four major earthquakes in New Zealand, known as the “Canterbury earthquake sequence”, shook the region to its core. This terrible episode highlighted the vulnerability of so-called “linear” infrastructure (roads, water networks, river management systems) to natural disasters. The local authorities had no choice but to re-examine their approach to natural disaster risk management. An innovative approach has thus been developed: experts from Aon used disaster modeling and engineering knowledge to better understand the vulnerability of infrastructure to natural disasters. This has made it possible to identify ways of protecting previously uninsurable assets to make them more resilient, alongside risk transfer solutions to manage risks that cannot be controlled. This article was co-authored with experts from Aon, the multinational professional services company. THE TE PAE CHRISTCHURCH CONVENTION CENTER (NEW ZEALAND) is highly earthquake-resistant, maintaining its structural integrity and shape even in the event of extreme seismic activity. Its design incorporates lessons learned from the Canterbury earthquakes in 2010 and 2011 to create more resilient buildings. READ the full article in Constructing a Sustainable Future Investing differently: the risk transfer approach Risk transfer is a management technique whereby a third party assumes the financial consequences of a risk. In this model, insurance becomes a strategic lever: it doesn’t just provide compensation after the event, it encourages stakeholders to design for resilience from the outset. 63 62
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