Kathmandu. Recent floods in South Asia have highlighted the complex natural disaster risks faced by hydropower, infrastructure, and construction projects. Especially where damage to a property can disrupt interconnected facilities and take a long time to recover.
According to Alex Davis, director of natural resources for AON Asia, recent floods in South Asia highlight the complex risks faced by hydropower, infrastructure and construction projects globally. “While it’s too early to assess the insurable impact of this event, it underscores the importance of understanding how natural disaster risk can affect critical infrastructure assets and the communities and economies that depend on them,” he said.
Hydropower projects rely on interconnected assets, including dams, tunnels, transmission infrastructure, access roads and ancillary facilities. This means that damage to even one component can have wide-ranging consequences for operations, supply chains, and recovery timelines. “Recent events have shown that damage to even one element of that network can have wide-ranging consequences for project operations, supply chains, and recovery timelines,” Davis said, adding that insurance companies are increasingly considering these broad interdependencies when assessing risk and resilience in major infrastructure projects. ’
The macro-disaster risk environment is also changing. AON’s ‘2026 Climate and Disaster Insight’ report states that the global economic damage from natural disasters could reach $260 billion in 2025. While the insurable loss was $127 billion. That’s 27 percent more than the 21st century average.
The report also identified a global safety gap of 51 per cent. “From an insurance perspective, such incidents reinforce the need for a forward-looking approach to risk assessment,” Davis said, adding that historical damage data should be included alongside climate science, disaster modelling, engineering analysis and asset-specific risk assessments. ’
Davis said insurance eligibility is increasingly determined before a project reaches the insurance market. “Decisions made during feasibility, site selection, engineering design, procurement and construction planning can affect loss outcomes, lender confidence and future insurance market interest,” he said. ’
Data, modeling, scenario analysis, and stress testing can help organizations evaluate climate-related physical risks and inform decisions related to project design, financing, and risk transfer. In addition, early incorporation of risk engineering, climate analysis, and insurance advice can strengthen long-term viability and project confidence. — Agency
