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Flood risk response strategies


Flood Risk Response Strategies 1 of 4

In this article we look at the implications of extreme flooding events and their impact on corporations across the globe.

Global increase in annual weather-related catastrophe events 1970 - 2013

Source: JLL Global Sustainability Perspective, April 2014:
SIGMA 2013 - Global Natural Catastrophe Disasters, Swiss Re, March 2014, JLL Analysis

Between 1970 and 2013, the number of weather-related catastrophes significantly increased worldwide, from 30 annually during the 1970s to 120 each year since the start of the millennium. In the last decade, we can point to the likes of Hurricane Katrina (2005) and the extensive flooding in Thailand (2011) as some of the worst examples. Two more recent examples stand out:

  • Hurricane Sandy wreaked havoc on New York City in 2012, devastating lives, destroying homes and interrupting businesses. A third of Lower Manhattan’s office space (over 3 million sqm) remained out of operation for at least a week after the hurricane struck. Economic losses were estimated at US$65 billion, of which just US$30 billion were insured.

    Source: JLL Global Sustainability Perspective, April 2014
    Munich Re, March 2013
  • In Central Europe, widespread flooding in June 2013 was seen across Southern and Eastern Germany, Austria and the Czech Republic. Property damage alone was estimated to have reached US$24 billion (€17 billion).

Such extreme events are headline-grabbing and generally contribute to the majority of losses, however, geographically spread and high-frequency rainfall can cause similar levels of damage. In the UK, for example, extraordinary levels of precipitation in 2012 caused the second-highest annual flood losses since records began.

All regions, not just those prone to extreme weather events, are therefore increasingly at risk of flooding. According to a study from the European Commission’s Joint Research Centre (2012), it is predicted that annual flood damage in Europe will rise to €46 billion by the 2050s. This is a huge increase on the average losses over the last four decades – at €5.5 billion.

River flood losses in Europe: historic vs future

Source: JLL Global Sustainability Perspective, April 2014
European Commission, Geneva, 2012

A 2012 study by the London School of Economics managed to isolate the effect of a changing climate on property losses. The study showed that property losses had increased every year, even after factoring in population growth and increased value of assets over time. The increase in insured losses since the 1970s can be seen in both the USA and Germany.

Originally published : April 2014

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