Changes in the climate have the potential to produce significant changes in the risk posed by natural hazards around the world.

As the world economy grows and changes, the risk to businesses, governments and public well-being will be dominated by the combined dynamic effects of changes in hazards, and the increasingly fast evolution of economic vulnerability to extreme events. The potential exists for economic risks from natural hazards to increase to levels where events with devastating and wide economic impact on countries and companies are no longer rare.

As highlighted in the latest Intergovernmental Panel on Climate Change (IPCC) report, the current state of knowledge on climate science, and hence current and future changes solely in the frequency and severity of natural hazards, continues to develop, but is still largely clouded with uncertainty. In contrast, factors driving increases in vulnerability, including the total assets exposed to these hazards and the consequences of those assets being impacted, continue to expand at a steady rate. Interconnected economic growth is increasingly concentrated in coastal urban areas, which increases the density of economic value in regions that are disproportionately exposed to hazards from wind and water—the two hazards most impacted by changes in the climate.