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Are heatwaves the next big thing we’re not thinking enough about?

In 2020 a significant threat passed by almost unnoticed, due in part to the distraction of the Covid-19 crisis. However, what we witnessed last summer in Britain was part of an increasingly frequent and severe emerging risk, which could be far more damaging in the long-term than the current pandemic, says RiskSTOP's Helen Rapley…

AS PEOPLE complained last summer about crowded beaches and failed social distancing, we largely overlooked our record-breaking UK heatwave in August 2020. In the south east in particular, we experienced a long run of days with temperatures of 34C and more, together with an unprecedented series of so-called ‘tropical nights’ where temperatures failed to drop below 20C.

Continental Europe also faced extreme heat, before the hot spell ended with thunderstorms and torrential downpours leading to widespread flooding and disruption. Rising heat “has become one of our city’s greatest challenges” Kostas Bakoyannis, mayor of Athens told an online event last year. Meanwhile, in the US city of Phoenix, flights were delayed when airport temperatures reached 48C and in Los Angeles, the summer heat led to tens of thousands losing power for days.

These events are just a snapshot of an emerging pattern. In June 2019, Europe faced its most severe heatwave in sixteen years. France, for example, recorded its hottest day ever, hitting highs of 45.9C. The last time the continent faced such extreme temperatures was in 2003, when a heatwave killed more than 20,000 people. However, global average temperatures in the four years prior to 2019 were all higher than since records began in 1850.

More common

Extremely hot summers are projected to become increasingly common over the next few decades. A 2015 study published in the scientific journal Nature Climate Change found that extreme weather events, that would have occurred only twice a century in the 2000s, are now expected to happen twice every decade.

One clear impact of heatwaves is increasing deaths among the population. A study by researchers in Melbourne, Australia, found that if the rate of carbon emissions continues to increase, heatwave deaths in Brisbane, Sydney and Melbourne are set to go up by almost 500%. In the UK, in 2018, a House of Commons report said that heat-related deaths could triple by 2050, reaching up to 7,000 per year.

Other consequences also arise from heatwaves. According to Copernicus' European Forest Fire Information System (EFFIS), more than 1,600 wildfires were recorded across the EU between January and mid-August 2019, more than three times the average over the previous decade. In urban areas, heatwaves can interrupt daily life, bringing transport to a halt and severe disruption to work.


Speaking to Thomson Reuters recently, Sophie Evans of the London-based Centre for Disaster Protection, commented: “When the roads start to melt, whose job is it to manage those risks? Whose job is it to make sure people can get to work? That risk ownership is crucial.”

Which brings the question, what role (if any) can insurance play when it comes to heatwaves? Since the 1990s, utility companies in cities like Chicago have used weather derivatives - an early form of heat insurance - to hedge the cost of buying additional power on hot days when electricity demand outstrips supply. Heat has also been an indirect part of ‘index-based’ insurance for hard-pressed farmers in parts of the world, which provides automatic payouts for assumed crop losses if, for instance, enough days pass without rain.

However, a wider range of heat insurance offerings - likely aimed initially at city authorities or similar government buyers around the world - are now being explored as the risks and costs of heatwaves rise, insurance experts said.

Barney Schauble, chairman of Nephila Climate, one of the companies figuring out ways to transfer risks from climate and weather threats, said as yet there is “no standard product that is heatwave insurance”. Instead, creating insurance that works for heatwaves requires taking a hard look at the risks a city or company wants to protect against.

Risk management

And what about the role of risk engineers and managers? This is an area I feel particularly strongly about. Our approach to climate risks needs to be all encompassing. There is something urgent and far greater than just financial loss to consider here.

The World Health Organisation (WHO) is predicting 250,000 additional deaths every year from heatwaves within the next ten years. However, when you look at the wider issues around the environment and climate change, such as changing weather patterns, flooding, ecological impacts and so on, some argue (and very effectively) that it is our future existence which is at stake here.

Also, as we have seen with the pandemic, so much of our global economy depends on a complex system of interdependent supply chains. Understanding these supply chains has always been challenging for the insurance industry. Will the industry step up to the further rigour of evaluating the resilience of supply chains in a changing climate and what this means for distribution of resources and political stability? Will measures of climate change vulnerability become common terms when considering risk at account and perhaps site level?

We cannot afford to simply look at fire, business interruption and liability in isolation. Tackling environmental risk and providing support around this is not just a way of adding value. It’s already an imperative.

What more should risk engineers, managers and insurers be doing to tackle climate change? Give us your thoughts by commenting below or on our Linkedin page.



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