Earth

Floods, hurricanes, and droughts - the financial implications of global warming are enormous. Someone has to quantify the risk.

Total economic losses from Hurricane Katrina in August 2005, are now estimated at about US$125bn, about 1% of the entire US GDP. These losses spread out from the hurricane, the core event, to its unpredicted and disastrous consequences notably the flooding of New Orleans. From North Atlantic hurricanes and tropical cyclones in the Pacific and Indian Oceans to winter storms in Europe, we are all now feeling the effects of climate change.

With the potential for minor hazards as well as devastating natural disasters, global warming will touch everyone in some way. Businesses and lives will be profoundly affected and while we can look at protecting ourselves more effectively we also have to reassess the risks we face. Insurers in particular have to develop an appreciation and response to the rapidly changing risk profile produced by climate change. Long term it's one of the greatest challenges the industry faces.