Protecting SMEs against disasters

Malaysians are already feeling the heat from the super El Niño that is expected to continue until next year. The phenomenon has been exacerbated by climate change, and the high temperatures will come alongside severe weather events such as droughts, floods and heatwaves in the country.

For businesses, these increasingly frequent weather events can have direct operational and financial consequences. Their assets could be damaged by floods and operations disrupted by water shortages; heatwaves could trigger fire risk and threaten employee health and safety.

The economic impact of climate-related disasters is also significant. The World Economic Forum has estimated the annual global cost of climate-related damage to be between US$1.7 trillion and US%3.1 trillion by 2050.

This is already a major concern among Malaysians, as reflected in Zurich Malaysia’s Climate Resilience Survey in 2024. The results showed that 74% of Malaysians were highly concerned about heatwaves, with 53% very concerned about climate change impacts on future generations.

Other top concerns included floods (75%)and landslides (70%), alongside urban infrastructure risks like fallen trees and sinkholes (67%). In the previous 12 months from when the survey was done, almost a third of the respondents reported being directly impacted by severe climate events, with 38% of them citing their families as victims.

It’s not just affecting individuals. Up to 58% of the respondents described their local communities to be most affected by severe climate events.

Whether it’s on the individual, business or community level, preparedness for these events is key. This could be even more important for businesses, whose investments, assets and employees are at risk.

However, to do so requires a deep knowledge of the risks that businesses may face in particular locations, and the right actions that can be taken to increase their resilience against such events.

Depending on where the business is located, the risks and required measures will differ. Certain parts of the city, for instance, are hotter than others, and more vulnerable to fires and the negative impacts of extreme heat on assets and human health. Properties close to rivers and in dense urban areas are at higher risk of flooding; those located by the coast could encounter sea level rise and coastal erosion.

Examples of proactive measures that could be taken include employee heat protection, backup water and power planning, supply chain disruption planning and other contingency measures.

But its not just about responding to disruptions. Businesses also need to anticipate risks and identify their vulnerabilities early on so they can introduce appropriate safeguards before conditions worsen.

The risks faced by different localities vary, requiring data sets and solutions that are unique to the area. Additionally, substantial investments may have to be made into new solutions and technologies, as well as in the hiring of experts to guide businesses through this journey.

For small and medium enterprises (SMEs), this could be difficult to manage due to lack of resources and scale.

For these businesses, insurance and takaful can play a critical role in supporting their resilience planning and help them manage the financial impact of disruptions that may affect their assets, operations and income.

Zurich has built up its expertise in this area to support all types of businesses over the years. For instance, through its Climate Resilience Solutions, a global team of climate risk experts helps businesses identify and manage current and future climate risks. They perform bespoke site-level assessments, create future-looking scenarios and provide practical recommendations.

In Malaysia, the insurer and takaful provider launched the Zurich Malaysia Urban Climate Resilience Programme (UCRP) in 2023, which is powered by the Z Zurich Foundation. The UCRP identifies local vulnerabilities and develops practical and targeted responses.

Since then, it has rolled out programmes with local authorities and other partners to help vulnerable urban communities cope with climate change impacts like extreme heat.

For instance, under the UCRP Kuala Lumpur initiative, Zurich Malaysia and the Z Zurich Foundation collaborated with C40 Cities and the Kuala Lumpur City Hall to develop the Community Action Plan (CAP), launched in 2025. The plan includes interventions such as cooling room, greenery and sunshades to reduce the impact of extreme heat in two low-cost flats in the city.

These initiatives underscore Zurich Malaysia’s commitment to introduce resilience to communities and businesses in the face of worsening climate change impacts and weather events like the El Niño.

For businesses, aside from identifying risks and preparing solutions, getting the right protection should also be a critical component of their continuity planning. One example is Zurich Malaysia’s Z BizGuard, a customisable SME protection solution against a range of operational risks, including from fire and flooding.

The solution protects key business assets such as premises and equipment, and covers losses that may affect business income and continuity when unexpected disruptions occur.

With such protection, business owners can have a peace of mind when unexpected disasters or disruptions occur. Going forward, building resilience will become ever more essential for businesses and communities, as climate change and other extreme weather events are likely to continue posing threats to the environment and societies.

Resilience starts from understanding where the risks are and preparing for it early on. With the right measures, businesses can be spared from disruptions and face unexpected events and difficult times with sufficient protection.

For further insights into Zurich Malaysia’s climate resilience initiatives, please visit https://www.zurich.com.my/about-zurich/corporate-responsibility

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