NU Online News Service, March 28, 2:01 p.m.EDT

The 2011 floods in Thailand were the most expensive flooding onSwiss Re sigma records, but a study of exposures in emergingmarkets around the world shows that other countries may representeven greater flood risks.

After the Thailand event, Swiss Re says it “undertook a global study toidentify other emerging markets comparable toThailand, namely thosewith high-flood risk and recent strong economic growth.”

The sigma study, “Natural Catastrophes and Man-Made Disasters in2011” notes that losses mounted from the Thailand event becausemany international companies over the last decade have investedheavily in Thailand, setting up branch offices or building assemblyand manufacturing plants there.

Industries such as car manufacturers and high-tech manufacturingand electronics all suffered losses, and Swiss Re says the floodshighlighted the importance of supply chains when calculating anindustry's risk exposure.

The study says, “Companies' direct investment in foreigncountries is increasing, and with it the exposure to foreign localcatastrophe risks.”

Turning to other markets with similar growth in economicdevelopment, the sigma study says China tops the list for thehighest flood risk in emerging markets, followed by the other BRICnations (Brazil, Russia and India).

Thailand, despite having the highest ever flood insured floodlosses so far, ranks seventh, according to Swiss Re.

The report notes that Vietnam, which ranks tenth, could move upin the rankings as Japanese companies relocate business operationsfrom Thailand. Interestingly, the report notes when discussing theThailand floods that many Japanese companies initially shiftedtheir production toThailandin the wake of the March 11 Japanearthquake and tsunami.

“Surprisingly, Kazakhstan and Azerbaijan are among the top 10,”the study says. “Both experienced recent high economic growth andincreasing foreign investment, particularly in the oil and gassectors.”

Discussing measures that governments and insurers should takegiven the flood risks to emerging markets, the study says, “On theone hand, businesses, governments and societies at large shouldincreasingly consider more stringent natural-catastrophe andmanmade disaster-risk prevention and mitigation measures,especially in emerging countries of growing significance to theinterconnected global economy.

“On the other hand, the insurance industry would do well tofurther examine the implications of global-supply chains for a moreholistic risk assessment going forward.”

The study notes that the Thailand flood event resulted in anestimated $12 billion in insured losses, the highest insured lossin the history of global fresh water floods and more than threetimes the size of any other insured loss of its kind inhistory.

Swiss Re says flood-loss potential can be just as high as thatof earthquakes and storms. Furthermore, the study notes that floodscan happen in almost every county, so there may be more hiddenflood-loss potential than the industry realizes.

Regarding overall catastrophe losses in 2011, Swiss Re's sigmareport says catastrophes caused $116 billion in insured losses and$370 billion in economic damages. The year saw 325 catastropheevents, 175 of which were natural with the remaining manmade.

The figures are revised from a December 2011 Swiss Re sigma study, which reported $108 billionin insured losses for the year and $350 billion in economiclosses.