Climate risk, insurance, and tourism sector

THE tourism sector forms an important segment of the economy for many countries across the world.

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With its wide variety of actors—from large corporates to micro, small, and medium-sized enterprises—tourism can create jobs, contribute to the GDP, enhance local infrastructure development, and can help to conserve the environment, natural heritage, and local communities.

According to the Sri Lanka Tourism Development Authority, Sri Lanka saw more than 2 million tourist arrivals in 2023, a significant increase of 38% as compared to 2023. With tourism arrivals of around 493,000 in January and February, the year 2024 is on track for further growth, now also emphasising the sector’s importance for economic growth and employment opportunities.

However, as many other sectors, the tourism industry is increasingly facing climate-related risks, including extreme weather events, sea level rise, temperature increase, or the degradation of natural ecosystems. Stakeholders across the sector have an opportunity to explore innovative approaches to bolster their resilience across all dimensions, including physical, social, and financial.

Climate risk and the tourism sector

The tourism sector is highly vulnerable to climatic variations and environmental impacts. It faces a multitude of risks from both sudden-onset and slow-onset impacts, as well as indirect impacts across related supply chains. This can disrupt operations, damage property, erode the natural resources that provide a key attraction for tourists, or entail serious economic implications.