Insurers say extreme weather and slump are a vicious circle

Ben Southwood
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THE PROLONGED economic downturn is eating into the capacity of countries to deal with extreme weather and environmental problems, which is in turn adding to business malaise, according to a report out yesterday.

Difficult times in the world economy have driven money and attention away from abating climate change, and counteracting its harmful effects, the World Economic Forum’s (WEF) 2013 report on risks claims.

Rather than benefiting the economy, on balance this approach ends up backfiring, they say, as more rapid climate change is leading to more extreme weather, and less preparation for this weather means it wreaks more havoc.

“With the growing cost of events like Superstorm Sandy, huge threats to island nations and coastal communities, and no resolution to greenhouse gas emissions, the writing is on the wall,” said Alex Lehmann, chief risk officer at insurance giant Zurich. “It is time to act.”

The authors claim the focus of voters and policymakers on the short term was preventing huge long-term problems being resolved with measures that would be costly right now.

“National resilience to global risks needs to be a priority so that critical systems continue to function despite a major disturbance,” added Lee Howell.