According to the UN Office for Disaster Risk Reduction (UNDRR), nine out of ten disasters in the last decade were triggered by water-related natural hazards. This alarming statistic underscores the urgency for the mobility sector to confront escalating water-related physical risks that can severely impact revenue, insurance premiums, and capital investments. To effectively mitigate these risks, it is essential for the sector to adopt strategies like advanced flood forecasting, infrastructure enhancements, and comprehensive emergency response plans, in alignment with the Sendai Framework for Disaster Risk Reduction.
Global focus
Mobility sector struggles with escalating water-related risk
Potentially stranded assets and increased insurance premiums in high-risk areas drive the need for effective mitigation strategies
Nature & climate risks
Mobility (all industries)
Publication date: 02 Jul 2024
By Tony Barba
AT A GLANCE
Nine out of ten disasters in the last decade were triggered by water-related natural hazards, spotlighting urgent risk.
Financial impacts for mobility include asset damage, disrupted operations, and spikes in insurance costs.
Adaptive strategies like infrastructure upgrades and comprehensive risk assessments are critical to enhancing sector resilience.
Risks and financial impact
Physical risks in the mobility sector, such as damage to assets from acute events like floods and hurricanes, pose significant financial implications. The Task Force on Climate-related Financial Disclosures (TCFD) highlights that such events can lead to reduced revenue due to decreased production capacity, disruptions in the supply chain, and increased insurance premiums. Furthermore, chronic shifts like rising sea levels can lead to early retirement of assets in high-risk locations.
Building resilience
To counteract the impacts of climate-related water risks, the mobility sector is focusing on reinforcing infrastructure. Adhering to the TCFD’s recommendations, firms are encouraged to conduct comprehensive water risk assessments and scenario analyses. The TCFD has partnered with the World Wildlife Fund (WWF) to provide a detailed water risk brief, offering tools and insights to build adaptive capacity and ensure sector-wide resilience.
Disclosing climate strategies
The TCFD emphasises the importance of transparent reporting on climate-related risks and opportunities. Firms within the mobility sector are advised to disclose their governance structures and the impact of climate risks on their strategic planning. This includes outlining the board's oversight, management’s role in risk management, and the integration of risk management processes at all levels. Additionally, they should detail the metrics and targets used to manage climate-related risks.
Future-proofing infrastructure
Moving forward, the mobility sector must continue to enhance its resilience to water-related risks. This involves regular assessments to identify vulnerabilities across key operational sites, particularly those prone to flooding or sea-level rise. Firms are encouraged to follow the UNDRR principles for resilient infrastructure. By updating risk management strategies at least once a year and engaging in resilience planning, the sector can protect against future climate impacts and maintain operational continuity.
FURTHER READING
- Water risks and resilience (UNDRR)
- Principles for resilient infrastructure (UNDRR)
- Water risk filter brief (WWF & TCFD)