Large corporations are under increasing pressure to disclose and ultimately financially protect themselves against weather, climate and natural disaster risks, the result of which will be a growing demand for insurance, reinsurance and risk transfer.In the last couple of years the pressure is mounting, with the United Nations and other global organisations now pushing for international accounting standards to include a level of disclosure.

The “1-in-1003 initiative, which looks to integrate climate and natural disaster risk into the financial system through a process of stress-testing and disclosure, is gaining support. It seeks to mandate that globally active corporations report their exposure to 1-in-100 year disaster losses and also their resilience efforts against weather and disaster risks on balance-sheets.

The idea is that by encouraging disclosure it will also encourage greater resilience. Corporations would look to become more physically and financially resilient to disaster and weather losses in order to improve their balance-sheets, which of course means greater use of insurance and risk transfer, resulting in greater need for reinsurance and risk transfer tools such as insurance-linked securities (ILS) and catastrophe bonds it is assumed.

The UN process is ongoing, with other organisations such as the World Bank heavily involved and engagement from across the financial, capital markets and business sector. The desire to get something in place to at the least encourage, if not mandate, disclosure of disaster and weather risks is high.

Interestingly, in some business sectors large shareholding investors are now pushing this same agenda as well, as they become increasingly aware of the threat that a changing climate and resulting heightened potential for disaster and weather impacts could have on their holdings.Interestingly the sector that has most recently come under pressure is the U.S. oil industry.