How resilience can become a competitive advantage in APAC | Zurich Talks - Risk to Resilience

Tulsi Naidu, CEO APAC, Zurich Insurance, and Jennifer Richards, CEO APAC,
Aon, explore how Asia Pacific's fast-growing economies can better manage rising climate risk.

They discuss the region's widening protection gap, the role of insurance and data in making projects bankable, and why shifting the focus from risk transfer to resilience and risk reduction can unlock competitive advantage for companies.

More on Zurich Talks: https://www.zurich.com/zurich-talks

Transcript

SPEAKER_01 0:17

Welcome to episode two of Zurich Talks, Risk to Resilience, a series that tracks Zurich sustainability engagements across the world, bringing together Zurich leaders and external experts to examine how risk is evolving and how we're building resilience in response.

SPEAKER_02 0:37

We sit in a very privileged position of really helping our clients make better decisions to protect and grow their businesses. Everything that we do for our clients around helping them around the risk and human capital issues come down to how do they use data and solutions.

SPEAKER_00 0:57

What we do very well when we work together is think about the client situation, think about how between us we can bring risk insight into thinking about the client's business, thinking about where mitigation is possible, how we structure their risk reduction in their business model, bring our collective insights to bear in creating much better solutions and access to capital for the clients we work with.

SPEAKER_02 1:37

And really what we're seeing from a macro perspective, and this is a global phenomenon, right? We are seeing more volatility and frequency in terms of large loss events. So, just by way of example, um in 2025 there were 30 global incidents incurring over a billion dollars of loss as compared to the prior trends that we saw, which were about 17, so close to doubling of that. What that translates to from an Asia Pacific perspective is in 2025, $76 billion of losses incurred in this region. Only 10% of those were insured.

SPEAKER_00 2:20

It is a big concern. Asia Pacific is probably the region of the world that has the highest growth potential and the biggest exposure to climate, whether that's tsunami, whether that's drought, uh, whether that's uh cyclone. So we're seeing a real juxtaposition of different kinds of climate hazards. Uh the implication really is around better design. Better design up front. Uh we have some very complex, very large infrastructure projects in this part of the world. But the key issue that we've all got to be focused on is whether at the design stage, at the pipeline stage, there's adequate thinking ongoing about how to build this infrastructure in a resilient way. So it does what we expect it to do 15, 20, 25 years from now.

SPEAKER_02 3:07

And what does this mean in terms of how we play this forward into your questions about the resilience of these projects? Is that adequate protection of assets of projects is incredibly important in order to make them bankable, underwritable from a risk perspective. And that's really the dynamic that we are working on together in Asia Pacific to help improve the approach which companies and governments take to addressing that protection gap so that we can make this region more resilient and attract more capital so that businesses here can grow in a sustainable fashion.

SPEAKER_00 3:45

This is a complex topic. There's what I would describe as a structural challenge around public good, where I think a lot of people think this is for governments to deal with. And in practice, what that means is insurance is not seen as a natural go-to. Insurance penetration is low in this part of the world, and understanding of how you use insurance for risk protection is more limited. And so what we see is first order that the risk is absorbed by the communities, it's absorbed by companies, and it's absorbed by the government in the form of a fiscal burden. I think that then goes to insurance is less developed as a risk acceptance tool or as a risk uh offlay tool. But the methodologies and the understanding of the data and insights that risk uh that insurance can provide and that people like Aeon and we can provide is also less understood. And that means that there is less mitigation of risk in the system than there would otherwise be.

SPEAKER_02 5:55

The question is how we get those data sets to be richer so that they actually address this convergence risk so that you're not looking at one data set in isolation and not understanding um the implications across the entire ecosystem.

SPEAKER_00 6:10

So we're seeing this, this is a big topic. Uh the modeling around climate is a fundamental building block when we think about risk. Um, you then overlay onto that um other, you know, other hazard types uh as we think about whether it's cyber, whether it's other events that might occur. But climate's a pretty fundamental uh part of the equation. Everybody thinks this is more complex than it should be, right? And I find when people engage, when you have decision makers engage, you get attention because the business case is obvious, but all too often risk is seen something that sits um that doesn't particularly risks such as climate doesn't sit right on the board table in terms of what are the mitigation measures that need to be taken, what are the implications of physical climate risk. There's a sort of sense that it's down to insurance and it's going to be dealt with by somebody who's sourcing insurance and ideally at the lowest cost possible. There isn't really a thought process about what is the nature of this risk, how is it how can it be quantified? How do we reduce it? Uh, what measures can we take to reduce it? Now, what I do find is that when a company has had a loss, that attention comes straight in.

unknown 7:33

Right?

SPEAKER_00 7:34

That attention comes absolutely to the forefront. Uh, and you get the whole board table, you get top management thinking about how uh the measures, initiatives that could be taken. But we shouldn't have to wait for that.

SPEAKER_02 7:47

Yeah, so I think first of all, um as Tulsi and I have spoken about, the tools are available. So, first of all, I think it starts with data, and that's asset-specific data so that um clients and investors can really understand an asset on an asset basis what the risk is. I think the second is financing and really leaning into blended financing structures. We've seen a lot of success in the region with regional initiatives. I think we've also got collaboration between different parties in the ecosystem, be they uh clients, corporates, um, asset managers, um, investment banks. There is really an ecosystem here where I think shining more light on the data in order to drive better decisions is really, really fundamental. I like to think about it as going to be a catalyst for further focus because as we talked about, volatility and frequency is increasing. The world is becoming a more volatile place, and so now's our opportunity to really lean in to the solutions, the innovation. And I think the opportunity for uh corporates and other parties to think about this is really an opportunity to take a competitive advantage. And I think that's another lens just around putting the opportunity lens on it as well. It is inevitable. It is inevitable as we're starting to see the increase in volatility, frequency, as well as the sheer sums of uninsured or underinsured losses. Um, there needs to be a greater attention and focus. And I think the sooner we're able to price the risk of not doing anything, um, we'll build in further adaptation and further resilience. I think that the one sort of I think salutary tale on this is that it's not just a flip-a-switch type of um discourse. It does take time. I think it requires interdisciplinary approaches. You know, Tulsi and my organization aren't able to solve it in a vacuum. Um, and so we need um insurers, risk advisors, engineering firms, capital providers, all to really lean in. Um but I have a huge amount of optimism about that.

SPEAKER_00 10:20

Well, I think that trend is um more visibly seen perhaps in uh mature markets, but I think corporates who are at the leading edge of thought in Asia Pacific are also uh moving. Uh, and I think to some extent there's an inevitability to this, right? So you've seen you've seen the disruption that cyber attacks have caused, you've seen the kind of outages, you've seen how the management agenda code's completely hijacked, similarly with climate. And so the increasing um volume of these events in the environment around us, the lived example of the disruption that they cause is absolutely causing uh management teams, boards to sit up and think about how to ensure that they're not at the receiving end and that their business is resilient through crisis. Um, and I think clearly the leaders are ahead of the curve. Risk is a topic that should be front of center for boards, management teams, the government. And um what we bring to bear is an understanding, a long and deep understanding of how risk has risk has evolved and can be managed. Um we need everybody to join the conversation. We need everybody to participate, and this will take a village to get done.

SPEAKER_02 11:53

My call to action would be to really lean in. Um, as Tulsi and I have spoken about today, um, we live in a time where access to data has never been greater. And so the access to rich data to really help clients, governments, investors make profoundly better decisions is available, and what we really need is this catalyst to action. Lean in, use those insights to take meaningful action.