Malaysians are already feeling the heat from the super El Niño that is expected to continue until next year, alongside severe weather events like droughts, floods, and heatwaves. The phenomenon has been exacerbated by climate change, bringing higher temperatures and increased risk to both daily life and the economy. For businesses, these frequent weather events create direct operational and financial consequences, from damaged assets to disrupted operations due to water shortages. Heatwaves further trigger fire risk and threaten employee health and safety, creating a complex challenge for local companies.
Rising Costs and Concerns
The economic impact of climate-related disasters is significant. The World Economic Forum has estimated the annual global cost of climate-related damage to be between US$1.7 trillion and US$3.1 trillion by 2050. This economic pressure is already evident among Malaysians, as reflected in Zurich Malaysia’s Climate Resilience Survey in 2024. The results showed that 74% of Malaysians were highly concerned about heatwaves, with 53% very concerned about climate change impacts on future generations. Other top concerns included floods (75%) and landslides (70%), alongside urban infrastructure risks like fallen trees and sinkholes (67%). In the previous 12 months, almost a third of the respondents reported being directly impacted by severe climate events, with 38% citing their families as victims.
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Up to 58% of the respondents described their local communities to be most affected by severe climate events. Whether it is on the individual, business, or community level, preparedness for these events is key. This is even more important for businesses, whose investments, assets, and employees are at risk. However, to do so requires a deep knowledge of the risks that businesses may face in particular locations, and the right actions that can be taken to increase their resilience against such events.
The risks faced by different localities vary, requiring data sets and solutions that are unique to the area. Additionally, substantial investments may have to be made into new solutions and technologies, as well as in the hiring of experts to guide businesses through this journey. For small and medium enterprises, this could be difficult to manage due lack of resources and scale.
Insurance as a Tool for Resilience
For these businesses, insurance and takaful can play a critical role in supporting their resilience planning and help them manage the financial impact of disruptions that may affect their assets, operations, and income. Zurich has built up its expertise in this area to support all types of businesses over the years. For instance, through its Climate Resilience Solutions, a global team of climate risk experts helps businesses identify and manage current and future climate risks. They perform bespoke site-level assessments, create future-looking scenarios, and provide practical recommendations.
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In Malaysia, the insurer and takaful provider launched the Zurich Malaysia Urban Climate Resilience Programme (UCRP) in 2023, which is powered by the Z Zurich Foundation. The UCRP identifies local vulnerabilities and develops practical and targeted responses. Since then, it has rolled out programmes with local authorities and other partners to help vulnerable urban communities cope with climate change impacts like extreme heat.
For instance, under the UCRP Kuala Lumpur initiative, Zurich Malaysia and the Z Zurich Foundation collaborated with C40 Cities and the Kuala Lumpur City Hall to develop the Community Action Plan (CAP), launched in 2025. The plan includes interventions such as cooling room, greenery, and sunshades to reduce the impact of extreme heat in two low-cost flats in the city.
