WTW has teamed up with the University of Geneva to study the rare but catastrophic effects of significant volcanic eruptions on climate, food security and society.

It is hoped that the collaboration will produce a body of research that will help organisations to understand how a substantial volcanic eruption may affect their operations and portfolios, and to better manage their exposures to the risk over the long term by modelling their effects on weather-related extremes (such as frost, floods and droughts) over the next few decades.

Despite their status as the largest non-human influence on global climate, volcanic eruptions have not received the attention they deserve from either the risk management field or the climate impacts research community, WTW asserts. And whilst industry-standard disaster scenarios for re/insurance typically focus on hurricanes, earthquakes or floods, none of those perils match the potential of volcanoes to disrupt climate and society at a global scale, WTW adds.

It is more than two centuries since Indonesia's Mount Tambora erupted in April 1815, ejecting roughly 200 cubic kilometres of rock into the atmosphere and triggering a sudden global cooling that lasted more than a year. The subsequent “year without a summer", was plagued by climatic oddities caused by the eruption. In western Europe and the eastern United States, mid-summer frost and unseasonably cold weather led to reduced agricultural yields, crop failures and sharp increases in the price of staple foods. Snow fell as far south as Taiwan, both the Indian and Southeast Asian monsoon rains were disrupted and across Asia crops were damaged or destroyed by frost and flood.

Commenting on the collaboration, Scott St. George, head of weather and climate research for the WTW Research Network, said: “It’s understandable people worry most about risks that are familiar to them. But volcanoes have been the leading cause of global climate disruptions for most of human history. Through this collaboration, WTW will gain unprecedented insight into the worldwide consequences should a Tambora-scale eruption occur in our future. The fact that many of those risks may not be insurable doesn’t mean we shouldn’t quantify them.”

Markus Stoffel, chair for climate change impacts and risks in the Anthropocene at the Faculty of Sciences of the University of Geneva added: “Having worked extensively on the impacts of past tropical volcanic eruptions, it is surprising how little attention we pay to this disaster risk. Natural proxies – such as tree rings or corals – and historical accounts provide ample evidence for the catastrophic consequences that past eruptions have had on food security and societal stability. The collaboration with WTW is to better apprehend the likely consequences of volcanic risks and on how to fully recognise these overlooked risks in the insurance sector.”

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