Bad weather risks top business concerns for Africa this year

Risks of storms, earthquakes and floods are a top concern for businesses operating across Africa in the engineering, construction and real estate industries, according to a new survey. The Allianz Risk Barometer 2018 also revealed that business interruption risks, at 40%, is in second place, showing a steady increase from 2017. Fire and explosion is a new emerging threat in third spot at 29%, which is a 6% increase from the previous report. Cyber incidents follow at 22%, while market-related risks such as changes in legislation and regulation stand in fifth spot with a 21% reading. The report is published annually by Allianz Global Corporate & Specialty (AGCS) and is based on the insight of a record 1,911 risk experts from 80 countries. Seelan Naidoo, head of property and engineering at AGCS Africa, said: “Approximately $330bn was lost from natural catastrophes, globally. Climate disruptions are increasing in volatility throughout the world, impacting many sectors and industries - engineering, construction and real estate are being largely affected. “The risk in natural catastrophes has increased from 24% in 2017 to 30% in 2018 and another increase is expected.” He explained climate change, as well as increasing volatility, natural catastrophes, and fire and explosion are all risks that may result in business interruption, which is a risk in itself. South Africa has experienced a spate of natural catastrophes in recent years. The Rossburgh fire in March 2017 is a quintessential single loss on property due to a fire, said Mr Naidoo. In a similar incident, a Transnet warehouse went up in flames in a commercial business park just outside of Durban. It took 400 firefighters four days to extinguish it. The environmental liability and clean-up operations, business interruption and damages to third-party property claims have added to the costs that the local real estate companies have had to pay. It is also predicted that more than $8trn will be invested in infrastructure projects across 65 countries, which will drive demand for large-capacity construction and engineering insurance solutions. With this kind of investment being ploughed into the sector, it is imperative for businesses to be sufficiently protected as part of their risk management solutions. The engineering and construction industries suffer project completion delay losses that result from natural catastrophes. In instances where rainfall is abnormally frequent, construction projects usually have to come to a halt as the conditions are unworkable. Because no adverse weather conditions are taken into account during the project implementation plans, engineering and construction companies run the risk of operational losses especially where earth moving equipment is leased and charged at daily or hourly rates. Ali Shahkarami, head of catastrophe risk research at AGCS, concluded: “The impact of natural catastrophes goes far beyond physical damage to structures in the affected areas. Natural disasters disrupt the normal dynamics of societal and industrial operations in the immediate regions affected and beyond, impacting a large variety of industries that might not seem affected at first glance.”

Bad weather risks top business concerns for Africa this year

Want to read this article?

Read Next

US insurers expected to increase casualty pricing as social inflation rises

Consultancy S-RM expands cybersecurity practice to APAC

Multinational corporate client practice launched by Crawford

AIG premium falls after sales but underwriting results and rates improve

Swerma to focus on AI and ESG in 2024

US insurers expected to increase casualty pricing as social inflation rises

Consultancy S-RM expands cybersecurity practice to APAC

Multinational corporate client practice launched by Crawford

AIG premium falls after sales but underwriting results and rates improve

Swerma to focus on AI and ESG in 2024

Want to read this article?

Read Next

US insurers expected to increase casualty pricing as social inflation rises

Consultancy S-RM expands cybersecurity practice to APAC

Multinational corporate client practice launched by Crawford

AIG premium falls after sales but underwriting results and rates improve

Swerma to focus on AI and ESG in 2024

Related Articles