Panellist at Strategic Risk Forum 2014 sees more corporates taking up weather solutions
Today’sStrategicRISK’s inaugural annual conference in Asia is bringing bring together APAC’s top risk professionals in Singapore.
Sales leader Asia Pacific at Swiss Re Corporate Solutions Steve Higginson (pictured) is taking part in a panel discussion on the maturity of risk management in the region.
Higginson has told StrategicRISK that a related issue of increasing importance was the rise of weather risk management in China.
More and more corporates and individuals were taking up weather solutions, he said.
“Aquaculture insurance has always been a conundrum due to its complexity in risk assessment and claim handling,” he added.
Swiss Re’s agricultural expert for China Yuanyong Long (also pictured) said that his company had recently partnered with China Pacific Insurance and launched a temperature index insurance product for hairy crabs.
“This product compensates the hairy crab farmers for the loss of output due to persistent high temperature, measured by the weather data provided by meteorological stations,” he said.
“This marks the first time of the aquaculture industry adopting temperature index insurance in China.”
Long explained that Swiss Re had started to promote weather index solutions in China over the past few years.
“While weather exposure is well known in various industries such as agriculture and energy, weather solutions are still new to this country,” he said.
“The emergence of weather solutions makes proactive weather risk management possible.
“With increasing knowledge on weather risk management, more and more companies and individuals have started to utilise weather solutions to limit their weather exposure to a bearable level.”
A form of gambling?
In response to claims that weather insurance was a form of gambling, Long said that the opposite was true.
“In fact, if a company manager is aware of his weather exposure but takes no action against it and merely hopes for good fortune to prevail, he is actually gambling with the earnings of the company against the weather conditions,” he said.
Long added that the public’s perception of weather risk in China was changing.
“Weather risks were perceived as force majeure and the managers hence were not held accountable in the past when the public were not aware of weather solutions,” he said.
“In the future, however, the public will question whether the managers have made appropriate decisions on risk management and whether there would have been better solutions for weather risks.”
A growing number of corporates would choose to transfer part of their weather risks to professional risk bearers, Long predicted, in order to reduce disruption to company operations and to concentrate the corporate resources on more strategically important areas.
Themed ‘The path to better risk management in Asia’, the Strategic Risk Forum 2014 features risk professionals and specialist brokers exploring current and emerging trends in key risks affecting companies today.
Swiss Re Corporate Solutions is one of the forum’s partner sponsors.