With its new Position Paper on Water Risks, the Emerging Risks Initiative (ERI) of the Chief Risk Officer (CRO) Forum has aimed at synthesizing what water risks represent for the reinsurance industry in terms of scarcity, pollution, health, treatment, conflicts, regulatory and reputational risks.

Water risks are complex to assess. Such difficulty stems from the paradoxical nature of water: it is plentiful to many yet its scarcity affects hundreds of millions of people, it is both fossil and renewable, it is freely supplied by nature but its treatment, distribution and wastage have a cost. 

This results in a global lack of preparation for future impacts and has implications for the re/insurance industry, as a majority of water risks represent externalities which are not properly priced or assessed.