Extreme weather shocks disrupting supply chains – here’s what risk managers can do
Ahead of the annual GVNW Symposium, BELFOR’s Martin Schachtschneider outlines what the climate crisis means on the damage restoration frontline, and why this is important for risk managers.
In March 2024, the Sigma Study produced by Swiss Re reported that insured losses from natural catastrophes have doubled in the last 30 years and will likely double again in the next decade. For Europe, this forecast is becoming reality.
Severe thunderstorms have already driven insured losses to more than $60bn in the first half of 2024, according to Swiss Re Institute.
The severity of the losses and the limited availability of granular exposure data and accurate risk models led Swiss Re to suggest that “it is time to adjust associated risk assessment”.
The DACH region has been one of the hardest hit. In 2023, Germany experienced unprecedented levels of flooding, storms and rainfall, which led to record high insurance claims, according to the German Insurance Association.
Germany has again been hit by extreme weather this year, and nat cat modelling company Perils estimates that the flooding in southern Germany in June will cost insurers more than €1.57bn.
Supply chain risks
The storms have caused supply chain disruption. For example, German carmaker Porsche was forced to stop production because a key supplier of aluminium had its factory flooded in June. Consequently, Porsche has revised its annual financial forecast downwards and cut its sales forecast by €1bn-€2bn.
The floods in Bavaria earlier this year highlighted supply chain risks when demand for restoration services exceeds supply – many businesses have to wait in line until a restoration company could service them. When several businesses are all scrambling for assistance, it is those that have our RED ALERT® contract in place that will be able skip the line and resume operations ahead of others.
From Swiss Alps…
Among the many cases of damage that BELFOR has dealt with is the Swiss town of Sierre, an industrial area on the Rhone that was flooded with more than 1.5m of water and mud.
The events were catastrophic. An entire neighbourhood has been declared uninhabitable and almost all production facilities in a 30-hectare area have been shut down, including two of the world’s largest aluminium processing companies, leading to serious supply chain disruption for global companies, especially in the automotive industry.
The BELFOR machine was set in motion immediately to take on the important task of restoring the operations of these companies as quickly as possible, while finding adequate solutions for the numerous small to medium-sized losses suffered by the affected population.
The resources provided by BELFOR’s European subsidiaries and network of trusted business partners meant that 300 employees, including more than 50 specialists, were brought to the affected sites in a very short space of time, equipped with the appropriate materials, technical equipment and devices.
…to Dubai desert
The unpredictability of extreme weather patterns was best exemplified by the torrential rainfall that hit Dubai in the UAE in April this year – another event in which BELFOR, especially its German subsidiary, played a leading role in the recovery.
Some areas, notably Dubai airport, received more than 250mm of rain in less than 24 hours, the heaviest rainfall in 75 years. The flooding led to flight delays and cancellations, and also put more than $8bn worth of aircrafts stuck on the runways at risk. Rail networks and other critical infrastructures were damaged by the storm, as were a number of large shopping malls.
BELFOR’s International Major & Complex Loss (IMCP) team arrived in Dubai shortly afterwards to support RED ALERT® clients and insurers/loss adjusters with professional loss assessments.
In the first days after the flooding, BELFOR Germany sent large drying equipment, vacuum ovens, immersion bath series, disinfection chemicals and all the basic equipment, such as gloves and even rubber boots. Getting everything to Dubai on time, dealing with customs and the local authorities, was certainly no easy task, but a logistical challenge that BELFOR Germany successfully overcame.
The best time to act was yesterday – the second best time is now. There seems to be no safe space on earth any more and business need to be prepared for more extreme weather events and damages. With BELFOR’s RED ALERT® we can offer those companies that can’t afford supply chain disruptions a promise that has tremendous value.
Whatever happens, wherever it happens, you won’t need to wait in line for help. With RED ALERT® you’ll enjoy priority status. In the event of a national disaster and increased demand, you are our top priority – RED ALERT® clients skip the line and get served first.
