Over PLN 16 billion – such would be the cost of the 2010 flood in Poland if it had taken place in 2018. The same impact of natural forces as eight years ago would result in 21% greater losses. If Poland does not implement a coherent risk management policy, greater losses caused by weather phenomena will become realistic, according to the latest report of the Polish Chamber of Insurance, ‘Climate of risk. How can prevention and insurance reduce the impact of natural disasters on the environment?’, prepared together with the consulting company of Deloitte. Honorary patronage over the report was assumed by the Ministry of the Environment.
‘Our climate is changing. Extreme weather phenomena are intensifying. At the same time, we are developing at a very rapid pace. Economic and civilisation development means that the cost of possible natural disasters will grow’, – said Jan Grzegorz Prądzyński, President of the Board of PIU. – ‘This can be avoided, and we therefore want to draw attention to the need for concrete measures which can significantly reduce the negative impact of natural disasters’ – he added.
According to the report by PIU and Deloitte, in Poland, the cities which are the most vulnerable to natural disasters and their socio-economic costs are Warsaw, Tri-City and Krakow. This is primarily the result of the largest population density and the amount of fixed assets in large cities. High positions are also occupied by Wrocław, Poznań, Łódź and Katowice. According to simulations carried out by PIU and Deloitte, a hypothetical flood in 2018, with the strength of the flood in 2010, would expose us to losses of PLN 16.2 billion, including private and public property, including investments of companies, local governments and the central budget. The largest loss would be borne by the Małopolskie and Podkarpackie Provinces.
A real threat of blackout
Climate change is also linked to increasing energy consumption. Increasingly hot and arid summers in Poland cause, among other things, greater energy demand, for example, due to the use of air conditioning. The intensity of extreme events (storms, violent winds) threatens the transmission infrastructure. This creates an increasing risk of a so-called blackout; namely an uncontrolled interruption in the supply of electricity for a large area of the country. ‘In the report, we estimate that if the weather or a massive cyber-attack caused an ongoing 8-hour-long interruption of energy supply today, the cost of the failure throughout Poland would be PLN 2.6 billion’, said Jan Grzegorz Prądzyński.
The world has ideas on risk management
In 2015, the UN Member States concluded an international agreement in Sendai, assigning government administrations the main role in disaster risk management, with the responsibility being shared by other entities, including local governments and the private sector.
‘Risk management means, among other things, investments. They reduce the likelihood of damage or its value, which is particularly apparent in the energy sector. The development of infrastructure or diversification of energy sources would have a significant positive impact on risk management in terms of energy security’, commented Irena Pichola, a partner, leader of the energy, sustainable development and economic analysis team at Deloitte.
Tasks for Poland
The growing frequency of natural disasters requires a new reorganisation of risk reduction processes. This can be achieved through appropriate education, preventive and adaptive measures, as well as transfer of risk, offered by insurers. At the same time, it should be remembered that security and stabilisation in the event of weather-related disasters can only be ensured by integrated actions of state authorities, society and the insurance sector. ‘Insurance is a part of crisis management, but it cannot replace it. The most important aspect is prevention, data collection and analysis’, commented Jan Grzegorz Prądzyński.
Report: ‘Climate of risk. How can prevention and insurance reduce the impact of natural disasters on the environment?’
Key figures from the report
