Ensuring/insuring resilient energy system infrastructure

Abstract

AbstractNatural disasters significantly impact energy systems and dependent critical infrastructures, causing severe human and economic losses in modern society. Given the increasing effects of climate change on both the frequency and the severity of extreme weather events, energy systems must adapt to cope with this new and evolving risk environment. In this perspective, we argue that re/insurers have an interest in supporting resilient infrastructure as well as the know-how to do so. Specifically, insurers can support resilient infrastructure by offering resilient-oriented insurance products, such as parametric insurance. Integrating resilience into re/insurance requires integrating existing assessment methods, including risk assessment, to develop innovative insurance products that help clients cope with climate change. Developing insurance products alongside industrial, academic, and government partners is key to making both effective and cost-attractive policies. While our argument is tailored towards energy infrastructure and climate change-related threats, resilience-based insurance would also be useful in mitigating the losses caused by other extreme and hybrid threats across interdependent critical infrastructure networks.