The research platform upon which we operate provides the opportunity to businesses to gain a systematic understanding of interconnected risks and vulnerabilities that are a concern to their resilience and sustainability. We are able to work alongside business to strengthen their uncertainty through development of adaptation and mitigation measures to ensure the resilience of their operating systems and the long term sustainability of their business.
The financial sector as an example:
Within the financial sector, the global insurance sector is facing unprecedented claims due to a recent increase in ‘natural catastrophes’ associated with global change. This is having significant adverse impacts on the affordability and availability of insurance, potentially slowing growth in the industry and transferring more of the burden to governments and individuals. Take short-term insurance, for example. In certain areas, an estimated 75% of ‘special peril’ claims over the past 15 years were paid out in the last five years to cover climate related events such as floods, wind and storm surge damage. In some instances, a single district municipality accounted for over 50% of these private and public claims.
Take short-term insurance, for example. In certain areas, an estimated 75% of ‘special peril’ claims over the past 15 years were paid out in the last five years to cover climate related events such as floods, wind and storm surge damage. In some instances, a single district municipality accounted for over 50% of these private and public claims.
Santam, the CSIR and UCT’s Centre of Criminology undertook a collaborative project to develop a ‘proof of concept’ to understand how both global change and human-induced changes are likely to affect the insurance industry. With a clear understanding, insurance companies can improve their risk assessment capability, and proactively manage the risk profile.
The project team modelled climate change projections for the southern Cape and the social-ecological risk landscape. This included risk factors such as flooding, wild fires and coastal storm surges, as well as the drivers of these risks, coupled with related ecological and social vulnerabilities.
Based on these, they compiled different scenarios of change, and identified those interventions that can mitigate future risk. By better understanding the social ecological landscape within which it operates, the insurance industry can play a very influential role to ensure that regulations are followed, and that the costs and benefits of different land management options are correctly considered in land use planning and decision-making processes.
