Scarcity and excess: Creating resilience at both ends of the water spectrum

AXA XL and Parima recently hosted an in-person event in Singapore on the increasingly urgent issue of water sustainability. Following are highlights from the event as attendees discussed the challenges to companies operating in places experiencing more frequent and severe droughts or floods or, in some areas, both.

In conjunction with the Pan-Asia Risk and Insurance Management Association (PARIMA), AXA XL’s Singapore office recently hosted its first in-person event in more than two years on the increasingly urgent issue of water sustainability. On the one hand, it was an excellent opportunity to meet face-to-face with clients and brokers once again. On the other hand, while the topic is highly relevant, the challenges are arduous. In many parts of the region, governments, corporations and citizens can expect to experience either more frequent and severe droughts or floods or, in some places, both. The following highlights some of the attendees’ main points on creating resilience.

A three-pronged threat

In his opening remarks, Xavier Veyry, AXA XL’s CEO for Asia-Pacific and Europe, noted that water shouldn’t be viewed as a stand-alone resource but as an essential part of a secure, safe and prosperous society. He outlined three specific risks associated with water:

• Too much—extreme rainfall, floods, storm surges
• Not enough—drought, scarcity
• Unfit for use—pollution, salinity, toxicity …

and highlighted the negative impacts these have on society, including poor health, interrupted education, gender inequalities, conflict and unreliable food production. In other words, access to adequate supplies of safe water provides significant social value, but these supplies are under increasing threat.

Xavier also summarised how AXA XL contributes to a more water-secure world, particularly via its Valuing Water program. The program was initiated in 2020 and is focused on three core pillars representing the most significant global water-related challenges:

Pillar 1: Supporting businesses to build resilience to water risks. This includes working with academics and experts from the water sector to better understand how water risks can impact business continuity and developing an interactive water security tool to help businesses identify how these risks could affect their operations. (The tool is set to be introduced later in the year.)

Pillar 2: Raising awareness of the water-climate intersection. This pillar focuses on supporting and publishing research on how climate change will impact the human-water relationship, including investigations into how drought risk can be better managed in the most vulnerable communities.

Pillar 3: Improving access to clean water, decent sanitation, and good hygiene. This pillar encompasses AXA XL’s philanthropic efforts to promote clean water and sanitation by partnering with the international non-profit WaterAid to bring clean drinking water to more than 10 thousand people in a rural water-scarce district in Northern India.

The business case for sustainability

In her keynote address, Esther An, Chief Sustainability Officer for City Developments Limited (CDL), showed why companies need to embrace sustainability-focused business practices, how such an approach can be implemented, and the benefits that can be achieved. CDL is a leading global real estate company with a geographically diverse portfolio comprising residences, offices, hotels, serviced apartments, retail malls and integrated developments.

Esther reminded the audience that only three percent of the world’s water is freshwater, and two-thirds of that is tucked away in glaciers or otherwise unavailable for use; that leaves just a little over one percent for humanity. Esther also remarked that water insecurity will surge as the world’s population continues to swell. By 2050, if business-as-usual persists, more than half the world’s population and approximately half of global grain production will be at risk due to water stress. She also noted that the top six countries most exposed to river floods, based on population, are in Asia.

An urgent imperative: Developing greater resilience

Aniket Jalgaonkar, AXA Climate’s Lead for Asia-Pacific, described how “Asia’s first major climate crisis is already at its doorstep, and it’s in the form of water”. He noted, for instance, that, in 2021, five of the ten deadliest flood events were in Asia, including seasonal flooding in India, China, the Philippines and Vietnam, and widespread devastation in Malaysia & Indonesia.

Aniket also touched on how water is a shared resource within a catchment area and the challenges of using water in a “socially equitable, environmentally sustainable and economically beneficial” manner. However, Aniket suggested that achieving these objectives often involves resolving the needs/demands of the myriad stakeholders and affected interests within a catchment area, which is not always easy. Aniket also stressed that developing resilience through combination of adaptation and response is the most sustainable way for businesses to tackle climate risks.

Jamie Ayers, a director with the sustainability consultancy Engie Impact, highlighted the challenges for areas facing the dual threats of scarcity and excess. He noted that in 2021, parts of Northern Australia experienced first a 1-1,000 year flood, then a 1-100 year flood. These remarkable events were preceded by wildfires that spread over hundreds of thousands of hectares in prior years. Moreover, as the climate grows warmer, these unusual and extreme weather patterns will become more common. His message was stark: Given the increasing variability of weather patterns, preparing for these events and building more resilience will become an unavoidable strategic imperative for more and more companies.

Jamie suggested a three-pronged approach:

• Identify the risks. If you don’t know what they are, you can’t do anything about them.
• Assess and measure them. There are standard risk matrices and protocols that can be used.
• Monitor them. The climate is changing, and the risks are in flux. Companies need to effectively prepare for and respond to a changing risk landscape.

Paul Seaton, a director with Fugro, expanded on Jamie’s comments about identifying and assessing risks. Fugro is the world’s leading geo-data specialist; it collects and analyses information about the earth and the structures on it and provides clients advice and solutions for managing different perils

He described how Fugro creates visualisation tools showing the structures likely to be affected by an event given its severity. The example he shared was of the island nation of Tuvalu. The Tuvaluan government, companies and individual citizens are using Fugro’s models to protect the infrastructure and buildings most at risk from the more extreme storm surges expected in the coming years.

In his closing remarks, Xavier Veyry reminded the attendees that water security is a common challenge across countries. While progress has been made, we all need to play our part, continue taking collective action and work towards a more sustainable water future for all. He also stressed that building resilience is at the heart of what AXA XL does daily. Similarly, we intend to prepare our clients to address their potentially growing water risks. “We know that companies that get ahead of their water risks will exhibit resilience when they need it most and have competitive advantages in whatever markets they operate”.

Postscript

Two professional illustrators were on-hand during the event to capture all of the presenters’ and participants’ key points. Here is their output:

About PARIMA

PARIMA is the Pan-Asia Risk and Insurance Management Association. It is a not-for-profit professional association dedicated to developing risk management as a profession and providing a platform for risk & insurance managers to connect. It aims to strengthen and enhance risk management culture by creating opportunities for education and dialogue to spread best practices and knowledge within the community. It currently has more than 2,200 members representing more than 1,130 companies across the Asia-Pacific region. For more information on PARIMA and its activities, please visit http://parima.org/ or contact info@parima.org.