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Rising temperatures may boost liabilities


ANY LINGERING NOTIONS that global warming is not a risk management issue should be dispelled by last week's U.N. report that closely linked increases in rising temperatures with human activity.

Whether you buy the notion that greenhouse gases cause global warming, the earth is getting hotter and there are both catastrophe management and liability issues facing corporations as a result.

For many years, insurers, reinsurers and policyholders have dealt with the ramifications of increased storm activity, whatever the cause may be. Higher premiums, higher losses and more resources devoted to loss control have all followed in the wake of the storms.

The liability issue is more recent and, if it goes the wrong way for corporate policyholders, could cause problems in terms of defense costs, compensation payments and coverage disputes.

As we report on page 1, some observers fear that the U.N. report could give new impetus to existing lawsuits that are seeking to hold corporations liable for the property damages that the plaintiffs allege are directly linked to pollutants that the corporations release into the atmosphere.

The potential liability losses should make risk managers scramble to review their policies to see whether they will respond. You only need to look at the silicone implant litigation imbroglio to realize it doesn't take that much scientific evidence--let alone an international panel of scientists--to create huge liabilities.

While it is the job of senior executives and governmental bodies to regulate corporate behavior, global warming clearly extends to the risk management domain and risk managers should fight for a seat at the table to tackle the issue. At the very least, they should make sure that they are ready to deal with what we suspect will be a rapidly increasing number of lawsuits seeking to tap corporate dollars to pay for the consequences of climate change.