The Big Question: Can the industry answer the resilience wake-up call?

Geopolitical risks have dominated the discussion at the annual World Economic Forum (WEF) in Davos. In the lead up to the event the WEF issued its annual global risks report which unsurprisingly found businesses leaders see geopolitics as a major concern both currently and for the next two years.

With short-term concerns overtaking long-term objectives, the report found environmental risks declined in ranking in the two-year outlook. Extreme weather dropped from 2nd to 4th, pollution from 6th to 9th, while critical change to Earth systems and biodiversity loss fell seven and five positions respectively. All environmental risks declined in severity score, representing an absolute shift, not just a relative one. Yet over the 10-year period, they remain the most severe – the top three are extreme weather, biodiversity loss, and critical change to Earth systems. Three-quarters of respondents expect a turbulent or stormy environmental outlook, the most negative of any category.

Commenting on the report Peter Giger, group chief risk officer, Zurich said  “Despite extreme weather, cyberattacks and geopolitical conflicts posing escalating threats, disruptions to critical infrastructure ranked just 23rd among global risks for the next decade. This is a dangerous oversight. From power grids strained by record heat to coastal cities at risk from rising seas, we rely on systems that are underprepared and underfunded. When infrastructure fails, everything else is at risk. We must recognise how interconnected these threats are and invest now to strengthen resilience before the next crisis hits.”

For some time the (re)insurance industry has been stressing that the rising cost and severity of risks is moving the needle away from restitution to resilience. The need to build resilience to limit exposure is increasingly seen as a key part of the industry’s strategy for the future and there is an urgent need to engage with clients to ensure they understand the importance of being prepared for the scale of risks to come.

Lee Williams, Head of AdvantageGo.

Jason Richards, CEO, P&C Reinsurance UK&I at Swiss Re says the UK is a case where the industry’s efforts to drive resilience have been and will continue to be measured in the year to come.

“Between January’s and November’s flooding, record-breaking wildfires and a top 3 warmest year ever, 2025 served as an effective stress test of the UK’s national resilience,” he explains. “With the blank slate of a New Year, it is worth reflecting on the results of that test – and the opportunity at hand to strengthen the UK’s resilience in 2026.”

“Across the world, insured losses from natural catastrophes have surpassed $100 billion year after year, with 2025 proving no exception,” Richards continues. “For the insurance and reinsurance industry, this is no longer a distant scenario but rather a daily reality. In underwriting, capital allocation, and its role as a societal stabilizer, re/insurance is now dealing with risks that are becoming more complex, more interconnected, and more volatile than ever.

“In a new risk environment defined by economic uncertainty, geopolitical shifts and accelerating extreme weather impacts, the UK must answer what is rapidly becoming a resilience ‘wake-up call’. Our ability to protect communities, modernize infrastructure, and maintain productivity depends on it.”

Richards said recent years have revealed a defining trend: the rise of ‘secondary perils’ such as floods, wildfires, and hail. These once-lower-profile events now account for the majority of global insured losses. In EMEA alone, 93% of insured losses in 2024 came from secondary perils, predominantly flooding.

“The UK is no exception,” he adds. “Storm Eowyn last winter was a stark reminder of the nation’s exposure to extreme weather, but even more concerning is the rapid rise in flood risk. Many UK flood defenses were built for a climate that no longer exists. As weather patterns become more volatile, the vulnerabilities of our housing stock, infrastructure and communities become more pronounced.

“This aligns with Swiss Re’s latest SONAR 2025 analysis, which highlights extreme heat, more volatile precipitation patterns, and infrastructure at risk of ‘invisible hazards’ – where damage accumulates before it becomes visible. Heat-driven stresses on buildings, energy systems, and transportation networks will increasingly shape loss patterns and demand for coverage.”

However, Richards said there are positive signs.

“The UK is beginning to act,” he explains. “The government’s renewed commitment to building new flood defenses signals that adaptation is no longer optional. It is a necessary long-term investment in national resilience.

“Flood Re remains one of the most successful public-private partnerships in global insurance, protecting over half a million homes that would otherwise struggle to access affordable flood cover. Its Build Back Better provisions (i.e. funding resilient reinstatement rather than like-for-like repair) are the kinds of forward-looking measures the UK must look to scale at pace.

“What is also clear, however, is that resilience must reach far beyond household protection. With the government’s ambition to build 1.5 million new homes, future construction must reflect the climate of the next fifty years, not the last fifty. Avoiding floodplains, improving building standards, and embedding resilience at the design stage are each essential if we are to reduce future losses and keep insurance accessible.”

Richards says: “Economic resilience is closely linked to human resilience. The UK’s long-standing productivity challenge limits growth, investment, and ultimately societal stability. Yet with a targeted industrial strategy – unlocking innovation in engineering, infrastructure, renewable energy, and health – the insurance sector can play a critical role.

“Through the ABI, insurers have already committed £100 billion to productive UK assets, supporting transport, social housing, and healthcare. These investments strengthen both the economy and the foundations on which resilient communities are built.

“At the same time, the labor market trends pinpointed by SONAR 2025, such as ageing workforces, skill shortages, and pressure on the NHS, pose structural threats to long-term productivity and health outcomes. These translate directly into rising life and health claims and operational pressures across industries.”

Data will be vital adds Richards.

“If the UK is to meet its resilience challenge head-on, better data sharing and risk visibility must become standard practice,” he continues. “Outdated exposure data runs the risk of resulting in mispriced risk, underinvestment, and escalating protection gaps. Emerging risks – from extreme heat to fungi-related losses – demand clearer modelling, stronger data collaboration, and new underwriting tools.

“With that in mind, the role of innovation – whether through AI-driven analytics, parametric solutions, or expanded public-private partnerships – will be central. Every pound invested in prevention saves multiples in recovery. That is the resilience dividend, and it is increasingly supported by evidence across flood management, planning, and resilient construction.”

Richards concludes: “Volatility will continue. But this is also a moment of opportunity: for insurers, government, and society to redefine resilience as a shared priority. By embedding adaptation into underwriting, policymaking, planning, and public engagement, the UK can protect its people, unlock long-term growth, and uphold the role of insurance as a port of stability.

“Resilience is not a luxury; it is a critical investment in our future. A resilient UK will align infrastructure, policy and behavior with where our weather systems are heading. That requires making the right choices now: stop building tomorrow’s claims on floodplains; fund the defenses and local projects that pay for themselves many times over; and embed insurance thinking where it belongs – at the drawing board.”