The World Economic Forum’s Global Risks Report 2016 found that climate change could lead to water and food crises, conflicts and forced migration in the APAC region – all serious threats to economic growth.
Stuart Spencer, APAC chief executive at Zurich Insurance Group, said: “It will be increasingly important that the region understands the connection between its economic growth drivers and the impacts of climate change, else we will face a perfect storm that could ultimately put APAC’s long-term growth in danger.”
The report states that as Asian countries push to urbanise rural areas in the pursuit of economic growth – with urban populations projected to increase from 48% to 64% by 2050 – this may drive social instability, the destabilisation of critical infrastructure, water crises and the spread of infectious diseases.
As a result, multinational companies will struggle to cope with the knock-on effects of this in terms of the logistics disruption caused by flooding, damage to infrastructure, and raw material price volatility.
Increased vulnerability
Steve Wilson, chief risk officer for general insurance at Zurich Insurance Group, said: “As Asia Pacific develops, the concentration of people, assets, critical infrastructure and economic activities in cities will increase vulnerability to damage from natural catastrophes, especially when compounded by climate change impacts such as storm intensity and sea level rise.
“The Global Risks Report shows clearly that the impact of climate change is intrinsically bound to economic prosperity.”
The APAC findings, which are based on a survey of 750 experts and draw on the views of 13,000 business executives, found that the top environmental concerns are natural disasters, man-made environmental catastrophes and extreme weather events. Executives in New Zealand, Philippines and Japan in particular have named natural calamities as their top threat to conducting business in the region.
Energy price shocks
In addition, the survey found that energy price shocks are considered the biggest risk to doing business in the APAC area particularly in developing countries such as Bangladesh, Indonesia and Sri Lanka.
Other concerns include asset bubbles where the countries most at risk are Australia, Cambodia, China, Hong Kong, Myanmar, and Thailand. There is also increasing anxiety over cyber-attacks in nations such as Japan, Malaysia and Singapore, which single it out as their highest concern.
