Environmental damage is ranked the leading risk by just over one fifth (22%) of businesses, but a median of 41% report they feel very prepared to manage a risk for which insurance mitigation has long been available.
The risks of environmental liabilities occurring are increasing in the face of natural catastrophe events, as seen post Hurricane Ida, when a petrochemical refinery began polluting excessively. Maintaining that resilience might need ongoing risk engineering and management plus regular policy wording reviews to ensure the same comprehensive insurance products remain available.
Retailers, food and beverage firms rank environmental damage highest
Retail, wholesale, food and beverage companies rank environmental damage their most pressing concern in this category, with a quarter saying this is their top risk. Any kind of pollution incident, particularly one that affects the soil or ground water is of course going to be particularly detrimental to food and drink producers. UK producers are the most concerned and the least resilient to this risk. US businesses are both less concerned by the risk and 21 percentage points more resilient.
Heavy industry shows strong resilience
Heavy industry, oil and gas and manufacturing have traditionally been the sectors most associated with environmental risks and all are near the top end of the scale in terms of prioritising these risks with 22% of energy companies ranking this risk top and 24% of manufacturers. Perhaps because of triggering environmental incidents and the associated litigation, neither sector scores very highly on the resilience spectrum compared to other sectors, with 38% feeling ‘very prepared’ to anticipate and respond to environmental risk.
As an industry we have understood the threat of environmental liabilities for many decades and have created solutions that aim at delivering positive outcomes for the environment, coupled with protection to enable businesses to operate in an effective but responsible way. The challenge we now face is ensuring we can find a sustainable path that maintains that same high level of protection as climate change increases the occurrence of natural catastrophes and creates events, such as flooding and migration, that lead to new and different exposure patterns.
Jayne CunninghamFocus Group Leader, Environmental Liability, Beazley