Climate risk may be slipping down boardroom agendas as executives grapple with cyber attacks, geopolitical tensions and economic volatility, but insurers and catastrophe specialists warn that the underlying threat is accelerating, and that businesses are dangerously underestimating how quickly losses could mount.
Industry experts warned that companies are increasingly distracted by short-term pressures even as climate-related disasters become more frequent, severe and unpredictable.
“People feel that, as far as the time horizon is concerned, it’s better for them to deal with the fires around them — the immediate risks — and deal with climate later,” said Kostantinos Papapetridis (pictured below), regional manager for North America at Allianz Risk Consulting. “But it’s much closer than we actually believe. Climate risk is changing, and if we don’t adapt at the same pace, we’re going to experience severe losses.”
The comments reflect growing concern within the insurance industry that a temporary easing in catastrophe losses, particularly in the US property market, may be breeding complacency among corporate policyholders.
Climate change fell to sixth place this year in Allianz’s annual Risk Barometer survey of nearly 4,000 risk professionals, down from fifth last year, overtaken by concerns including cyber risk, economic instability and political volatility. Yet executives stressed that the decline did not indicate diminishing danger, only louder competing crises.
Stephen Lanthrope (pictured below), global head of insurance at satellite analytics firm ICEYE, said the absence of a major US hurricane landfall last year had likely contributed to softer property insurance pricing and reduced urgency among buyers.
“It was actually quite an active season, but there weren’t any major events that made mainland US landfall,” Lanthrope noted. “Although Melissa had a devastating effect on Jamaica, there wasn’t anything material from that source in the mainland US, and that’s where you would have a greater economic loss and a greater insurance loss. But as soon as the next major event does make landfall, then I think the focus will be on it again.”
Insurers argue that climate risk differs fundamentally from traditional catastrophe modelling because of its systemic nature. Unlike isolated events such as earthquakes or regional floods, climate-driven disruptions can strike multiple geographies and supply chains simultaneously.
Papapetridis pointed to the challenge businesses face even when their own facilities are protected: even if a shop or warehouse can physically reopen quickly, surrounding communities, infrastructure and suppliers may remain incapacitated.
“The flood is not only going to hit you,” Papapetridis said. “It’s going to hit the 500 people living around you and their homes.”
That systemic exposure is becoming harder to quantify, the Allianz leader added. Catastrophe models are increasingly struggling to account for the pace of climatic shifts and the unpredictability of extreme weather patterns.
To close the gap, the insurance industry has invested heavily in climate analytics, machine learning and satellite monitoring. Allianz executives described using proprietary modelling tools that combine data from the Intergovernmental Panel on Climate Change with internal loss data to forecast how exposures may evolve over the next decade.
ICEYE, which operates a constellation of radar satellites, said insurers and corporates were increasingly using near real-time flood intelligence to assess supply-chain disruption and direct emergency response efforts during catastrophes. The company’s satellites can monitor affected regions up to 15 times a day, allowing customers to identify flooded factories, damaged roads and disrupted ports while events are still unfolding.
However, executives acknowledged that convincing companies to invest in resilience remains difficult, particularly when climate threats appear abstract or distant.
To illustrate the challenge, Papapetridis developed a simulation exercise for clients in which participants roll modified dice representing escalating climate events over decades. The game is designed to demonstrate how low-probability catastrophes can still produce devastating cumulative losses.
Regulatory pressure is also intensifying in some jurisdictions. Allianz pointed to new European resilience reporting requirements and California’s SB261 climate disclosure rules as early examples of governments pushing businesses towards greater transparency around climate preparedness.
Historically, Papapetridis said, many climate-linked disasters have been treated as statistical outliers. Today, the insurance industry is increasingly framing resilience not as a one-off infrastructure investment but as a continuous process requiring ongoing capital allocation and reassessment. “Resilience is a journey,” Papapetridis stressed. “It’s not a destination.”
Still, some fear the broader political and corporate focus on immediate economic and geopolitical shocks may delay adaptation efforts at precisely the wrong moment.
“They’re all important issues for us to manage as a planet, but the climate thing is not slowing down at all,” Lantrhope said. “We’re just not putting as much focus on (climate risk). You can take your attention off it, but that isn’t going to slow the process.”
