Extreme volcanic risk must be understood says broker

As Iceland continues to battle a series of volcanic eruptions broking group WTW has launched a new partnership to seek to quantify the impact of major eruptions on the planet.

WTW is to collaborate with the University of Geneva to quantify albeit rare but catastrophic effects of very large volcanic eruptions on climate, food security, and society.

The aim is to allow WTW and its clients to anticipate how a future massive eruption would affect their operations and portfolios and make better decisions to manage their exposure over the long term.

More than two centuries have passed since our planet was shaken by a truly large volcanic eruption. When Indonesia’s Mount Tambora erupted in April 1815, it ejected roughly 200 cubic kilometers of rock into the atmosphere and triggered a sudden global cooling that lasted more than a year. Known commonly as the “Year Without a Summer”, 1816 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.

At present Iceland is tackling a series of eruptions which have seen the evacuation of a number of towns and the extended closure of the world-famous Blue Lagoon, which remains closed.

Scott St. George, head of weather and climate research for the WTW Research Network, said, “It is 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 does not mean we should not quantify them.”

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 sector or the climate impacts research community. Industry-standard disaster scenarios for (re)insurance typically foreground hurricanes, earthquakes, or floods, but none of these perils match the potential of volcanoes to disrupt climate and society at a global scale. WTW and the University of Geneva are working together to quantify the risks of major eruptions over the next few decades and anticipate their effects on weather-related extremes, including frost, floods, droughts.

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 recognize these overlooked risks in the insurance sector.”