Business on the Edge 2024

Tropical cyclones and floods threaten infrastructure Tropical cyclones and flooding pose a significant and growing threat to life and infrastructure. High winds from cyclones can destroy buildings, kill thousands and cause massive economic losses. Hurricane Katrina, one of the most devastating US disasters, led to nearly 2,000 deaths and the destruction of over 200,000 homes.81 Elevated rainfall can trigger fluvial and pluvial flooding,82 damaging property, cutting off utilities and even causing hidden landslides. The after-effects, such as weakened foundations and costly repairs, can push communities into financial crises long after the water recedes.83 Annual financial losses accruing to retail properties from climate hazards across China could reach $21 billion by 2035, rising to $33.7 billion by 2055 under a high emissions scenario.84 Coastal hazards threaten 14 of the world’s largest cities Coastal cities are particularly vulnerable to climate hazards. Fourteen of the world’s 17 largest cities are coastal,85 making them susceptible to rising sea levels, intense storms, storm surges and erosion.86 Additionally, continued seaside development weakens natural defences such as mangroves and coral reefs, exacerbating the risk from extreme weather.87 Extreme heat will affect eight times more urban residents by 2050 Urban areas face escalating risks from extreme heat. Urban heat islands, caused by heat-absorbing surfaces, elevate temperatures in cities and other built-up areas.88 The number of cities experiencing extreme heat will nearly triple, exposing eight times more people to the impacts.89 By 2050, 1.6 billion urban residents will be more vulnerable to heat-related illnesses.90 Furthermore, high temperatures can reduce the efficiency of power transmission lines and transformers, leading to power outages.91 Extreme heat can cause roads to buckle, rail lines to warp and runways to soften or melt.92 It can also cause bridge materials to expand, leading to dangerous conditions and transport disruptions.93 Climate hazards drive up cost of insurance Climate hazards are driving up the cost and availability of insurance and financing. Extreme weather events can reduce the availability of funds or lead to higher borrowing costs due to increased risk of default or insolvency.94 Insurance becomes less accessible and more expensive, with insurers withdrawing from high-risk areas.95 This trend is creating “insurance deserts”,96 further threatening the economic stability of affected communities.97 Business on the Edge: Building Industry Resilience to Climate Hazards 31