According to a new report from FM and The Economist, the Asia Pacific region is quickly becoming a hot spot for climate disasters, and Australian businesses are not facing up to the risk, but neither are their counterparts in the Asia Pacific region.
This is despite natural disasters such as flooding in China and droughts in India causing US$65 billion ($A100 billion) in damages.
In Malaysia, major flooding is now frequent and causing US$1.47 billion ($2.17 billion) in damages.
In Singapore, heat stress is becoming a “critical national issue”.
And in Australia, environmental conditions in climate, water availability and vegetation growth deteriorated in 2023 in all states and territories bar the Northern Territory.
Yet, according to the report, Sight Unseen: Navigating Out-Of-Sight Risks, just 18 per cent of companies say the risks of such disasters are of low or medium priority,
In Australia, the number was higher, with 24 per cent of businesses ranking climate risks as low or of medium priority.
Andrew Stafford, senior vice president, operations manager, Australia & New Zealand, said: “It’s clear that Australian businesses are facing a multitude of ‘unseen risks’ and challenges.”
“It underscores the importance of proactive risk management and resilience-building to mitigate ‘out of sight’ risks before they escalate into major crises.”
A rethink is in order, the report said. But what could be preventing change is that risk assessors may not be quite up to the job at hand.
Annacel Natividad, president of the Pan-Asia Risk and Insurance Management Association, and chief risk officer and sustainability head at Aboitiz Food Group, said risk managers have not kept up with new and “rapidly evolving risk categories such as climate change and cyber threats”.
“These often fall outside the historical experience or core expertise of many risk managers, leading to an underestimation of their likelihood and impact, as well as a failure to fully identify the true value at risk,” she added.
She pointed to the Philippines, where annual typhoons are now often classified as super typhoons.
“These events have led to severe disruptions in logistics, shipping and local economies.” Other APAC countries are just as susceptible to extreme weather.
The report said risk management tools are available, but just 8 per cent of companies take advantage of them.