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Applying the lessons from COVID-19 to climate change

Applying the lessons from COVID-19 to climate change

If our eyes have been opened by the experience of the pandemic, maybe we can better anticipate the exponential harms caused by climate change?

Even for those of us who have been in the risk management sector for a while, I think COVID-19 represents our first experience with a rapidly growing exponential harm.

Going back to the first months of 2020, the advancing pandemic saw numbers of those infected and dying doubling, unremittingly, every three or four days. Projecting out a month or two, it was feared that without any intervention, fatalities were set to rise into the hundreds of thousands.

There is a now well-understood measure of the average number of new cases attributed to each infected individual — the regularly published “R” reproduction number. An R figure above 1 corresponds to COVID-19 infections accelerating. This R value, a parameter previously only known to epidemiologists, is the root cause of the exponential growth.

Many elements of the COVID-19 pandemic have parallels with the threat from climate change. Both have extraordinary systemic impacts. Both bring chronic and acute impacts on human health. For both, the cost of containment will be very high. A 2018 study calculated the expected annual global losses from pandemics to be $500 billion — or 0.6% of global income.

For the climate crisis, the Intergovernmental Panel on Climate Change (IPCC) has estimated costs at between 0.2 and 2% of global income.

What can the insurance and risk management industry take from this new understanding of COVID-19 — an exponentially growing risk — and apply to climate change?

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