The introductory part of the report presents observed and projected impacts of climate change on flood-related risks by region demonstrating that the probability of flood risk is increasing with climate change, due to more intense and frequent extreme precipitation events, while flood risk models still use historical trends to produce 1-3 year outlooks.
In a second part, CICERO analyses the total costs, indirect share of costs and insurance coverage for four different flooding events:
- Hurricane Harvey in Houston, 2017
- Superstorm Sandy in New York, 2012
- Copenhagen Cloudburst, 2011
- Regional flooding in Norway, 2012-2013
Through these four case studies CICERO demonstrates that “the industry sector is most exposed to direct flooding risk but other economic sectors can also be hit by flood, especially through indirect damage via transportation, communication and supply chain disruptions.”
CICERO also warns that “there may be a systemic risk related to the insurance industry as some of the risk previously covered by the public sector through national insurance programs is being transferred to the private sector”.
As a conclusion, CICERO provides two key recommendations for investors :
1) dialogue with companies to uncover potential vulnerabilities either in resiliency planning or insurance coverage;
2) consider new investment opportunities via technologies and services that can mitigate flood risk.