Rapid growth in the renewables energy sector has landed risk managers with a full in-tray of emerging risks, according to a new market report by Willis Towers Watson (WTW).
While insurance rates for buyers are expected to stabilise at low- to mid-single-digit premium increases in 2022, renewables risk managers face a complex web of threats – from the increased number and severity of natural catastrophes, to Covid-19-related supply chain disruption.
Graham Knight, head of global natural resources at WTW, said the speed of transformation in renewable energy is difficult to track, with record growth in solar PV and wind capacity. “This creates an incredibly complex and fast-evolving environment for the sector, so it is essential that organisations understand how to manage not only the speed of growth but also the emerging risks that arise, such as supply chain issues,” Knight said.
Renewable energy companies need their own climate transition plans to boost resilience to natural catastrophe and climate changes risk, the report says. Pressure from investors and the promise of further regulation will further align capital with the climate transition, WTW adds, and will require renewable energy firms to fall in line.
“Risk managers will begin to play a much more dynamic role in shaping climate risk responses within their companies – especially in relation to establishing improved ESG ratings, given the increased scrutiny from the financial industry,” said Knight.
Although already on the green pathway, renewable energy firms and risk managers still have work to do to boost their ESG ratings and build their own climate resilience.
Knight said: “Despite their apparent green credentials, it’s clear that renewable energy companies will be by no means exempt from what will be required by law across the globe in the months and years ahead.”