As climate change takes effect, engineers and politicians have focussed on reducing long term impacts through decarbonisation. But its equally important to address the harms already being seen around the world. Societies must build resilience, and can only do so with new models for partnership.

In the wake of a disaster—whether that is a climate related catastrophe, a cyber attack on infrastructure, or any of the other challenges our increasingly complex and urbanised world faces—those affected must set about surveying the damage and rebuilding their lives.

Their wider society will do the same. Engineers will examine buildings to see what can be repaired, and what must be demolished and replaced. Insurers will calculate the extent of the damage, and the payments that must be made. And politicians, locally and nationally, will try to understand the big picture. They’ll direct emergency responses to site, and then start looking at how recovery will be funded, in the days, months and years to come.

Whenever a disaster happens, there is an immediate challenge. but there is also an opportunity to learn. Engineers can learn more about the solutions that have worked, and about where the deepest harms are caused. Insurers can accurately map damage, making detailed assessments of costs and harms, on an increasingly granular level. And politicians and civil servants can gain a deeper understanding of the overall social costs.

By sharing these lessons, we can ‘build back better’. And if we really understand the impacts of disaster, we can ‘build back better resilience’, setting the costs of engineering solutions against the cost of doing nothing, and understanding the hard political choices that keep people and infrastructure out of harm’s way.

The importance of resilience

Philip Hoare is president of engineering services at AtkinsRéalis. He’s also the chair of the infrastructure investments and resilience group in the UK government’s Business of Resilience Taskforce.

“Everywhere you look, we’re seeing the impacts of climate change,” he says. “Rhe bigger challenge over the next 10 to 15 years is actually what are we going to do to adapt existing infrastructure and cities? “

As a global engineering firm, AtkinsRéalis’s work is increasingly focussed on helping build a path through the energy transition and designing or upgrading the built environment to tackle the dual challenges of decarbonisation and climate resilience. 

But, Hoare says, it’s not enough to just limit the impact of future climate change. We must work now to address the current impact of climate change.

“There’s an awful lot of work going on around net zero. Many governments have set targets around net zero and decarbonisation. That’s absolutely where there needs to be a significant amount of focus, we’re only going to deal with the long term challenges of climate change by taking carbon out of our atmosphere.”

But, Hoare adds, “The need is as pressing to deal with resilience as it is to deal with netzero. There has to be a two pronged approach. There needs to be a better solution to looking at climate adaptation, and how we adapt existing infrastructure to do that. “

Sid Miller is an insurer who has worked with big international insurance and financial services firms. He’s seen some of the challenges of recovering from catastrophe, during his time as chief executive of the New Zealand Earthquake Commission. He helped steer the recovery programme in Christchurch, after the city was rocked by a devastating earthquake in 2011.

He is a member of the Business of Reslience Taskforce, working alongside Hoare, and more than thirty other experts, including Julian Enoizi, who chairs the taskforce’s cyber and terrorism subgroup; and Dominic Christian, who chairs the climate risk and funding subgroup.

“It’s important to understand rthe role of the community here,” he says, drawing on his experience from Christchurch. “We often talk about things like Build Back Better, but think of the it as ‘Build Back Better Resilience’. We are in an evolutionary time with these challenges. What we really need to do, I think, is bring the community much more into this sort of discussion/”

Sid’s background is in the insurance sector. In Christchurch, he saw first hand the challenges of responding to disaster.

“The New Zealand Earthquake Commission, was a good example of a scheme that had been set up to deal with a large scale disaster. The financial response was there. The challenge was ‘How do you recover a city? How do you support the people of that city from a socio economic point of view? And what do you want your city to look like in the future?’”

As an insurer, he has seen how the increasing frequency and impact of disaster is undermining the insurance market. This is particularly true in areas that are—due to the current impacts of climate change—facing increasing flooding.

“Insurance is concerned with the probability of something occurring. When that is happening every year, at the same time,the probability 100%. It’s not insurance anymore, it’s actually a routine disaster occurring,” he explains. 

“The problem that creates for the insurance industry, is you’ve actually got people who will either make decisions not to insure, or you end up with under insurance. For governments, that’s a very serious issue, because they’re still going to have to deal with it. So how do we come together, to address this, as an insurance industry, with the infrastructure industry, and the engineering industries, in partnership? 

Insurance is a bet. And a betting market doesn’t work, if everyone involved knows the outcome in advance. Without insurance, the state must meet the needs of those impacted by disaster. To avoid this, we must either prevent people exposing themselves to unavoidable harms, or we must mitigate the impact and likelihood of those harms, so that the insurance market can function.

“If we keep building in certain places on floodplains, we’re not going to be able to insure it, because the risk is is only increasing,” Miller says. “People need to understand the level of flood risk that exists. Today, that sort of information, if you like, is quite asymmetric.”

In many places, individuals and local governments lack the knowledge of risk needed to help them decide whether to permit new building, or to move into a new property. In others, as Philip saw on a recent fact-finding trip, the risk is so high that only drastic action is possible.

“One municipality was talking about ‘managed retreat’ to describe how they will have to abandon some assets and buildings at their current shoreline, because they don’t feel they can address the insurance gap and they don’t feel they can afford the climate adaptation work that would need to be done.”

Bridging the triple gap

As members of the Business of Resilience Taskforce, Miller and Hoare have been working on a concept that helps understand how these challenges impact resilience. It’s called the ‘Triple Gap’.

Hoare explains, “The triple gap is that actually, there is a very significant funding gap between the amount of work that needs to be done to support that climate adaptation. 

“There is a growing gap in insurance. It’s becoming virtually impossible to insure in some areas of the world against flood risk, for example, and people are choosing not to insure as a consequence of doing that. 

“The third area is about just dealing with the impact of disruption when there’s a major climate disaster. The number of billion dollar insurance events has increased significantly from 2014 to 2021. There’s just a massive gap in terms of the amount of funding required to deal with the impacts of climate related disasters.”

There is a gap between the funds needed to support climate adaptation, and the funds available.

There is a gap between the potential—and, in fact, likely—harm caused by disaster, and the protection the insurance market can offer.

And there is a gap between the costs of recovery work, and the state’s ability to meet these costs.

These gaps affect everyone, but, most importantly, they affect those whose homes and neighbourhoods are hit by catastrophe. And they also affect broader society, as states are forced to divert funds to recovery. They affect private sector businesses: insurers who cannot offer insurance, engineers who cannot properly assess the risk to projects of potential catastrophe.

Closing these gaps will require a whole of society response, based on partnership. And that is what Miller, Hoare and the other members of the Business of Resilience Taskforce have been doing.

“Our task force was about actually using the great infrastructure capability that we have in the UK—and the phenomenal engineering talent that we deploy around the world—coupled with London being the centre of global insurance markets,” says Hoare.

The taskforce, set up by the UK Department of Business and Trade, aims in part to look at how Britain can export services based on these skills. But it is also about bringing together industries—such as engineering and financial services—where Britain has traditionally been strong, and sharing their knowledge.

“The more we can get data and information out to actually help people understand the risk and become party to the decision making processes, the faster we will move in terms of improving the situation and investing greater sums of money in resilience, because it will be supported by the public,” says Miller, adding, “In fact, more than that, the public will demand it.”

By engaging with other experts, engineers like Philip can see how their skills can best be deployed, meeting the desires of local communities, and the wider social and market need for resilience.

“From an engineering perspective, we can solve almost everything,” he says. “We can build everything on five metre high stilts. It is technically feasible, but might not be the right solution that you want to have in every area of the world.”

One of the ways engineers can fit the solutions they offer to these disparate needs, is by learning from the rich data generated by the insurance industry.

“That’s really the beauty of the work that we’ve been doing around business of resilience,” says Hoare, “It’s about asking, ‘How do you find other ways of injecting capital money into climate adaptation solutions?’ One way of doing that is to create this holistic approach around the ability to insure an asset in the future. It is predicated on that asset’s ability to not be impacted by climate change.”

In order to set premiums—or to decide if it is possible to offer cover at all—insurers must carefully study the likelihood of an adverse event. That has driven the industry’s investment in ever more sophisticated means of assessing damage, and calculating future risks.

“The sophistication we have in engineering and insurance around modelling and understanding risk is unparalleled,” says Miller. “But the way we use that has historically been quite fragmented. We look at it through our individual lens, whether that be the engineering, the investment, or the insurance and banking sectors. If we were able to look at impacts through a single lens and bring that modelling together and understand it as a collective, then I actually think that would encourage much more resilient investment.”

Any harm caused by a disaster reflects a failure. But it also presents the opportunity to learn and do better.

Miller says, “The ability to learn and not forget from these events is so important for the future. And I think that’s where the insurance industry has a lot of those learnings, as does the engineering industry, but from different perspectives.”

“The benefit of sharing some of the modelling and the information that comes from that, that allows people in communities to make different decisions,” says Hoare. “The more sophisticated the modelling techniques you have, the better able you are to predict some of those future impacts and make more informed decisions.”

We can’t change the priorities we face when disaster happens. But we can change how we set our priorities around the risk of disaster. This was one of the outcomes of Sid’s work in Christchurch. Not just rebuilding the city, but creating a new model that places resilience at the heart of every planning decision.

“We created a transformative model that we helps us deal better with future earthquakes in the insurance industry,” says Miller. “It’s a public private partnership, it shares data.“

The Earthquake Commission, can now bring prevention and mitigation to the heart of its work.

“That’s going to be far better investment for organisations like this, actually investing in that front end prevention,” says Miller. “Because that’s where the opportunity is.”

By making resilience partnerships and knowledge sharing commonplace, we can avoid the short term thinking that sometimes plagues both democratic societies, and private companies. If the costs of catastrophe are built into our decision making, we can look beyond the next election, or earnings report.

“A lot of societies spend driven by a political cycle,” says Hoare. “People will spend money after the event, trying to prevent an event happening in the same location, because they’ve seen the impact of the disaster on people’s lives. The bringing together of the insurance and infrastructure sectors in the way that we’re talking about here is about finding new ways of injecting capital.”

Building resilience is a shared endeavour. Through groups like the Business of Resilience Taskforce, industry leaders like Miller and Hoare are able to share their expertise with each other, and with their wider community.

The heightened awareness of climate impacts, driven by this knowledge sharing, will allow us all to look further as we plan new projects, and implement climate mitigation strategies. It will allow us to develop sophisticated techniques to understand disaster and risk. And it will give local authorities and first responders the tools they need to address the immediate impact of disaster.

The Business of Resilience Taskforce published its first summary report in 2022. It continues to work, and to build its membership, and at COP 28, Hoare shared some of the group’s insights with global stakeholders. 

“What we’re seeing in COP 28 is there is an agenda around climate resilience. There’s a recognition that decarbonisation has to remain a priority for nations, but dealing with the impact and ravages of climate change also needs focus to be put on it. We need to see a much stronger conversation about how we drive climate resilience, ahead of the decarbonisation programmes that we’re putting in place.”