Lloyd’s has launched a tool that models the economic impact of extreme weather events that lead to food and water shocks.  

The Cambridge Centre for Risk Studies is working with Lloyd's to help businesses and policymakers explore the potential impacts of the global economy becoming increasingly subject to systemic threats.  

In the first in a series of nine systemic risk scenarios, researchers explored how an increase in extreme weather events, linked to climate change, could lead to crop failures in key production regions of rice, wheat, corn and soy, and significant global food and water shortages.  

Societies around the world could see widespread disruption, damage and economic loss, promoting major shifts in geopolitical alignments and consumer behaviour.  

Only a third of the global economic losses caused by extreme weather and climate-related risks are currently insured, it says. The research aims to help risk owners better understand their exposure to critical threats such as extreme weather, and the role of risk mitigation and insurance protection to build resilience.  

Lloyd’s CEO John Neal says the market is committed to building better resilience and protecting customers against increasing climate threats.  

“It is critical that our market continues to collaborate with the public and private sectors to address this challenge at scale and ensure a sustainable future,” he said.  

“We will continue to use our convening power to support global risk resilience, providing risk transfer solutions to support companies and countries in their transition goals.” 

The tool provides insurers with a data-driven, financial impact assessment of the most significant global threats, considering the economic impact of extreme events across 107 countries and at three levels of severity. 

It includes regional analysis and says the recovery time for individual countries or areas depends on the structure of the economy, exposure levels and resilience. 

See full details here.