Recent floods in South Asia are highlighting the complex natural catastrophe risks facing hydropower, infrastructure and construction projects, particularly where damage to one asset can disrupt interconnected facilities and prolong recovery.
This is according to Aon, Natural resources director for Asia, Alex Davies, who said, “The recent floods in South Asia highlight the complex risks facing hydropower, infrastructure and construction projects globally. While it remains too early to estimate the insured impact of this event, it highlights the importance of understanding how natural catastrophe risks can affect critical infrastructure assets and the communities and economies that depend on them.”
Hydropower projects depend on interconnected assets including dams, tunnels, transmission infrastructure, access roads and supporting facilities, meaning damage to one component can have wider consequences for operations, supply chains and recovery timelines. Mr Davies said, “As recent events have demonstrated, damage to one element of that network can have wider consequences for project operations, supply chains and recovery timelines.” He added that insurers are increasingly considering these broader interdependencies when evaluating risk and resilience across major infrastructure projects.
The broader catastrophe risk environment is also shifting. Aon’s 2026 Climate and Catastrophe Insight found that global economic losses from natural disasters reached $260bn in 2025, while insured losses reached $127bn, 27% above the 21st-century average. The report also identified a 51% global protection gap. Mr Davies said, “From an insurance perspective, events such as these reinforce the need for a forward-looking approach to risk assessment.” He added that historical loss data should be complemented by climate science, catastrophe modelling, engineering analysis and asset-specific exposure assessments.
Mr Davies said, “Insurability is increasingly shaped before a project reaches the insurance market.” He said decisions made during feasibility, site selection, engineering design, procurement and construction planning can influence loss outcomes, lender confidence and future insurance market appetite. Data, modelling, scenario analysis and stress testing can help organisations assess physical climate vulnerabilities and support decisions on project design, financing and risk transfer, while integrating risk engineering, climate analytics and insurance advice early can strengthen long-term resilience and project confidence.